US Stock Futures Slide on Renewed Virus Concerns
*OspreyFX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions for more information.
- Stock futures susceptible to pandemic concerns
- Discord over the use of pandemic relief funds
Stock futures fell Friday on renewed pandemic concerns as a sustainable economic recovery now appears more uncertain. The number of new Covid-19 infections continue to rise across the US as the 7-day average now stands at 161,165, an increase of 26% compared to a week ago. Many states are now rethinking their plans to leave the economy open while some have already implemented restrictions to slow down the spread of the virus.
President-elect Joe Biden informed the public on Thursday that he will not implement a national lockdown, since the measure is seen as counter-productive even as we are headed into the colder months and the holiday season which is usually the busiest in terms of travel and social gatherings.
With one million new infections in the US over the last week, US authorities are advising strongly against traveling this Thanksgiving. An estimated 50 million people are expected to travel over five days, from Nov 25 to Nov 29. In comparison, 55 million individuals traveled during the same period last year.
Disagreements Over Fed Stimulus Funds
Meanwhile, also weighing on the markets is a spat over Fed stimulus funds. Treasury Secretary Steven Mnuchin and the Federal Reserve are at odds over its emergency lending facilities. Indeed, the Trump administration and the Fed dispute the extension and distribution of the pandemic relief programs.
On Thursday, Treasury Secretary Steven Mnuchin urged the Fed to reallocate $580 billion of unspent stimulus funding to aid the economy in the immediate future as the country awaits a vaccine release. In response, the Fed rejected the proposal with the argument that the emergency pandemic lending programs served a vital role. The Treasury Secretary suggested that the money could be used as grants to support the companies that were most heavily impacted by Covid-19 apart from extending unemployment insurance. The Fed programs were initiated this spring as a response to the Covid-19 pandemic that left many companies and workers out of the market. So far, these funds have been largely unutilized. According to the central bank, this is a sign that the economy is improving sustainably and organically.
DJIA contracts slipped 0.61% in the pre-market hours, while S&P contracts were down by 0.48%. Nasdaq futures are currently flat ahead of the opening.
Even though the Dow Jones and the S&P500 reached record highs on Monday following the uplifting vaccine news, the looming uncertainty is back as we inch closer to Thanksgiving and the festive season. The uncertain outlook has put a brake on the recent rally to record highs as optimism is set to the side and the market carries on powered by a risk-off sentiment. However, market participants are still hoping that vaccine research will yield results sooner rather than later.
European markets perform similarly. A weak Thursday session failed to bring any green in the European indexes as they all closed with losses close to 1.00%. Friday trading in Europe opens with markets struggling for a direction. In the early hours, equity markets are trading fairly flat.
Get the Most from Every Trade
OspreyFX is the perfect partner to help you on your trading journey. We can ensure that our traders trade with better insight by providing them with the valuable tools they need to tackle the markets. Try our Forex Calculators now and calculate probable factors of future transactions.
Subscribe to our newsletter to receive our weekly updates + more straight to your inbox!