Stock futures were mostly lower Thursday morning, with contracts on the Dow and S&P 500 sliding as optimism over a COVID-19 vaccine moderated further.
The Nasdaq outperformed after rising 2% on Wednesday, as the index tried to make up some steep losses from earlier this week. Monday and Tuesday, investors fled from high-growth tech shares and piled into value and cyclical stocks on hopes that a vaccine would drive a faster economic recovery and lift businesses hardest hit earlier during the pandemic. That swift rotation, however, was likely overdone, according to some analysts.
“I would say the death of tech was excessively premature,” Brian Belski, BMO Capital Markets chief investment strategist, told Yahoo Finance.
“Coming out of a recession and really kind of questioning what growth is going to look like over the next couple of quarters, and the higher likelihood of additional lockdowns on a state or even nation-wide level, really puts that increased confidence and bid in the technology stocks,” he added. “So again, the death of technology stocks and the stay-at-home trade I think is way, way, way too early.”
The U.S. has recently faced an increasingly dire pandemic situation, with the number of new cases reported daily topping 100,000 each day since Nov. 4, according to data compiled by the New York Times. The rising infection rate threatens to put the brakes on the economic recovery despite improving prospects for a vaccine, given that approval and distribution likely won’t come for another at least several more months. Pfizer (PFE) earlier this week reported early efficacy data showing their vaccine candidate was more than 90% effective in preventing COVID-19, and Moderna (MRNA) said it was closing in on releasing data from its own late-stage clinical trial in the near-term.
“The virus resurgence poses a key risk to the growth outlook,” Goldman Sachs economist Jan Hatzius said in a note Wednesday. “State and local governments have imposed limited virus-related restrictions so far, compared to the summer when many of the hardest-hit states imposed restrictions such as closing bars, restricting indoor dining, and limiting gatherings, with a pause or reversal in reopening in the vast majority of the country. This may soon change, with an increasing number of states and regions recently imposing or considering new restrictions.”
“While the data also suggest that voluntary consumer behavior has responded less strongly to increased virus risks during the recent resurgence, this could change should perceived risks increase as case counts, hospitalizations, and fatalities rise,” Hatzius added.
Investors received their latest look at the state of the labor market Thursday morning in the Department of Labor’s weekly jobless claims report. Another 709,000 Americans filed for first-time unemployment benefits last week, for a level still more than three times higher than the weekly average of new claims in 2019. And more than 21 million Americans remain on unemployment benefits of some form.
8:52 a.m. ET: Consumer prices flat in October, energy prices still down sharply over last year
Consumer prices were unchanged in October over September following a 0.2% monthly rise during the previous period, the Bureau of Labor Statistics reported Thursday morning. Consensus economists had expected to see prices tick up 0.1%, according to Bloomberg data.
Prices for food away from home increased 0.3% over last month and 3.9% over last year, on an unadjusted basis, as consumers began to trickle back into reopened restaurants. Energy prices, however, fell another 0.5% for the fourth decline in seven months. Energy commodities prices remain 18% lower over last year, and fuel oil prices remain lower by more than more than 28%, as travel demand has stayed anchored by the pandemic.
Excluding volatile food and energy prices, the consumer price index was still flat over last month, and up just 1.6% over last year. A 1.2% drop in apparel prices offset some more modest rises elsewhere in the index during the month.
8:30 a.m. ET: Jobless claims fall again, continuing claims also down
In the latest sign that the labor market is slowly healing, initial claims during the latest week checked in lower than expected, at 709,000 vs. 731,000 expected in a Bloomberg consensus forecast. Meanwhile, the prior week figure was revised slightly upward to 757,000. Markets are currently trading mixed after the data.
7:19 a.m. ET Thursday: Stock futures mixed as tech outperforms again
Here were the main moves in markets, as of 7:19 a.m. ET:
S&P 500 futures (ES=F): 3,550.5, down 17.25 points or 0.48%
Dow futures (YM=F): 29,082.00, down 229.00 points or 0.78%
Nasdaq futures (NQ=F): 11,885.00, down 1 point or 0.01%
Crude (CL=F): -$0.25 (+0.6%) to $41.20 a barrel
Gold (GC=F): +$8.00 (+0.43%) to $1,869.60 per ounce
10-year Treasury (^TNX): -5 bps to yield 0.939%
6:05 p.m. ET Wednesday: Stock futures slightly higher
Here were the main moves in markets, as of 6:05 p.m. ET Wednesday evening:
S&P 500 futures (ES=F): 3,571.75, up 3.75 points or 0.11%
Dow futures (YM=F): 29,339.00, up 28 points or 0.1%
Nasdaq futures (NQ=F): 11,891.00, up 5 points or 0.04%