Thursday September 17th

17-09-2020

Dow futures fall more than 300 points, tech and airline stocks are lower

U.S. stock index futures dropped as technology stocks declined, along with plays related to a successful coronavirus vaccine rollout. Futures on the Dow Jones Industrial Average fell 320 points, or 0.9%, pointing to an opening loss of 310 points for the average. S&P 500 futures fell 1.4%, while Nasdaq 100 futures dropped 2.1%. Investors evaluated for a second day the Federal Reserve’s interest rate outlook where it indicated rates could stay anchored to the zero-bound through 2023 as the central bank tries to spur inflation. Fed Chairman Jerome Powell also pressed lawmakers to move forward with stimulus. While traders want low interest rates, they may be second guessing what rates this low for years means for the economic outlook. Shares of stocks that would benefit most from a vaccine struggled in premarket trading amid conflicting messages about the timeline. President Donald Trump said late Wednesday that the U.S. could distribute a vaccine as early as October, contracting the director of the Centers for Disease Control and Prevention, who told lawmakers earlier in the day that vaccinations would be in limited quantities this year and not widely distributed for six to nine months. Carnival Corp and United Airlines both fell 2% in premarket trading. Technology stocks, which weighed on the market Wednesday and were the source of the sell-off earlier this month, were down in premarket trading again. Tesla was off by 2%. Netflix fell 1%. Shares of Snowflake, an IPO which captivated Wall Street on Wednesday as it doubled in its debut, were off by 3% in early trading. Traders were monitoring the status of stimulus talks after President Trump suggested Wednesday he could support a larger package. However, Politico was reporting that Senate Republicans appeared reluctant to do so without more details on a bill. The latest U.S. weekly jobless claims came in slightly better than expected. First-time claims for unemployment insurance totaled 860,000 in the week ending Sept.12, versus an estimate of 875,000, according to economists polled by Dow Jones. The S&P 500 slid 0.5% on Wednesday in a late-day sell-off brought on by tech shares and a reassessment of the Fed’s forecast. Big Tech dragged down the S&P 500 and Nasdaq, with Apple, Facebook and Microsoft all closing lower. The S&P 500 was still up 1.3% this week heading into Thursday after posting its first two-week decline since May previously. But it now appears that comeback is fizzling. Fed Chairman Jerome Powell said in a news conference easy monetary policy will remain “until these outcomes, including maximum employment, are achieved.” Normally, the prospects of lower rates for a prolonged time period spur buying in equities but that was not the case on Wednesday. “The major indices dipped back to their short-term trading range following the Fed’s announcements, confirming that bulls are still not out of the woods,” said Ken Berman, founder of Gorilla Trades. “While there was nothing scary in today’s Fed announcements, stocks reacted in a bearish fashion, especially in the tech sector.” Stocks in major Asia-Pacific markets mostly declined on Thursday as investors reacted to central bank developments. Hong Kong’s Hang Seng index led losses among the region’s major markets as it fell 1.56% to close at 24,340.85. Mainland Chinese stocks were mixed on the day, with the Shanghai composite down 0.41% to  approximately 3,270.44 while the Shenzhen component was above the flatline at about 13,015.19. South Korea’s Kospi shed 1.22% to close at 2,406.17. Japan’s Nikkei 225 slipped 0.67% to close at 23,319.37 while the Topix index dipped 0.36% to end its trading day at 1,638.40. Oil prices steadied on Thursday after a decline earlier in the day as production started in the Gulf of Mexico after Hurricane Sally while a drawdown in U.S. crude and gasoline inventories supported the market. Brent crude was up 20 cents, or 0.47%, to $42.42 a barrel, and West Texas Intermediate (WTI) crude rose 18 cents, or 0.45%, to $40.34 a barrel. Both contracts rose more than 4% on Wednesday. Gold slipped as much as 1% on Thursday after the U.S. Federal Reserve disappointed expectations for further stimulus to spur inflation and support the economy, battered by the coronavirus crisis. Spot gold dropped 0.9% to $1,940.96 per ounce. U.S. gold futures slipped 1.2% to $1,947.40.