Futures on Dow fell 70 points, indicating a loss of 0.3%. The S&P 500 and the Nasdaq are also expected to open lower, with losses of 0.4% and 0.3% respectively.
The Dow Jones Industrial Average lost more than 450 points, reversing its gain of 160 points earlier today. The S&P 500 also posted an abrupt loss, down 2.05%.
The shares are about to benefit from the reopening of the economies – retail, real estate, banks and airlines – leading to a drop in the significant averages. Disney fell 3%, Nike fell 2.9% and JPMorgan lost 3.3%. The operator of the Simon Property Group shopping center gave up a 10% gain to close in the red.
“You have a market just waiting to see how the economy opens up,” Quincy Krosby, chief market strategist at Prudential, told CNBC. “After almost six sessions of the rising market, you have the S&P 500 at a significant technical level, which is 3,000, and it needs a catalyst to climb above that. One of the main catalysts will be if the economy can open without increasing the number of cases. ”
The Nasdaq Composite broke its six-game winning streak Tuesday as investors calmed down on buying tech stocks. The average lost 2.06%; however, it has barely maintained its positive 0.3% gain since the start of the year. Apple and Microsoft lost 1.1% and 2.3% respectively. Netflix fell 2% and Amazon lost 2.2%.
Dr. Anthony Fauci said Tuesday that a vaccine will be essential to stop the spread of the coronavirus, but warned that it will take some time before a usable vaccine becomes available. Fauci added that the United States could face more “suffering and death” if the states began to reopen too quickly.
“Even if market players know Dr. Fauci’s position on opening the economy too early, hearing him testify has also helped support the idea that if you move too quickly, you run the risk of doing increase the cases, “said Krosby.
In addition, the Los Angeles County director of public health said on Tuesday that the order to stay at home in the area would be “with certainty” until July. While several southern states have already started to let non-core businesses resume operations.
“You also had concerns about the relationship between the United States and China,” said Krosby, after Senator Lindsey Graham introduced legislation requiring that China cooperate with or be exposed to coronaviruses sanctions.
“With everything the market needs to focus on, the last thing the market needs is to see a resumption of a trade war,” added Krobsy.
Traders will be looking for clarity on future actions by the Federal Reserve when Fed President Jerome Powell speaks on current economic issues at 9:00 am ET.
“Powell’s comments tomorrow will be scrutinized by the market to see how it plans to thwart the issue of negative interest rates,” said Krosby.
The Labor Department will release its producer price index for the month of April at 8:30 am on Wednesday. Analysts polled by Dow Jones expect a 0.5% drop in April after a 0.2% drop in March. Producer prices fell during the pandemic, driven by lower costs for goods such as gasoline and services.
Sony and Cisco Systems announce their quarterly results on Wednesday.
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