Stock futures sank Sunday evening as a rising number of states across the country reimposed social distancing standards to try and curb increases in coronavirus case counts.
The overnight moves came following a selloff Friday, with the Dow ending lower by more than 700 points, or 2.3%. The risk-off mood was spurred after cities and states hit with a resurgence of coronavirus infections tightened social distancing standards and reversed reopening processes already under way, further disrupting business activity.
More cities rolled back reopening plans over the weekend. California Governor Gavin Newsom said Sunday that the state was ordering bars to re-close in seven counties including Los Angeles. He also recommended another eight counties re-close their bars, due to the spread of Covid-19 across the state. California’s latest orders put the state in the company of others including Texas and Florida, which last week also mandated that bars in their states temporarily shutter.
“We suspect that most forecasters have been assuming a smooth(ish) rebound across the whole economy; we have. That now looks unlikely,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note. “It will take a month or so, at least, before the changes in behavior and new restrictions induce a sustained and clear downshift in cases and hospitalizations, allowing another attempt at reopening in the South. This means that the first month of the third quarter will be very weak.”
Globally, coronavirus deaths exceeded 500,000 over the weekend, and total cases topped 10 million, according to Johns Hopkins data.
Later this week, investors will receive a bevy of new economic data, including the June jobs report Thursday morning. The release will coincide with the Labor Department’s weekly report on new unemployment insurance claims, which is expected to show another 1.336 million individuals filed for new jobless claims the week ended June 27, down just slightly from the worse than expected 1.48 million reported last week.
“Last week’s data only showed minor improvements in both initial as well as continuing claims, suggesting that labor market progress may be stalling out since May’s blockbuster jobs report,” Deutsche Bank economist Brett Ryan wrote in a note.
“While there is certainly some disconnect between the claims data and the official employment statistics, both data indicate that newly unemployed workers are not transitioning into work at a particularly rapid pace and unemployment spells are lengthening,” he added.
Markets in the U.S. will be closed Friday in observance of the Fourth of July holiday.
6:04 p.m. ET: Stock futures open lower
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:04 p.m. ET:
S&P 500 futures (ES=F): 2,991.00, down 16 points or 0.53%
Dow futures (YM=F): 24,801.00, down 149 points, or 0.6%
Nasdaq futures (NQ=F): 9,803.00, down 62.5 points, or 0.63%