The action overnight on the futures markets was the result of a significant decline in the last week, triggered by the growing fear of a resurgence of the virus as well as by the profit taking of investors after the massive return.
The Dow and the S&P 500 have lost, respectively, 5.5% and 4.7% in the last week, while the Nasdaq lost 2.3 percent. The three major stock indices had their worst week since march 20.
“The merger may need to take a break, because the sentiment has become too bullish too quickly,” said Sunday, Sunday Ed Yardeni, president and chief strategist of investments at Yardeni Research. “Now that the re-opening is underway, there are fears of results in sub-optimal: less social distancing, triggering a second wave of the virus, followed by another series of blockages. ”
The States in the process of reopening, including Alabama, California, Florida and North Carolina, reported a daily increase of new cases of coronavirus. The Texas and North Carolina have reported Saturday, a record number of hospitalizations related to the virus.
During this time, governor Andrew Cuomo warned New Yorkers against the outbreak of a second wave of sars coronavirus. He said on Sunday that the State had received 25,000 complaints about companies violating the rules of the progressive reopening, threatening to take the licence of alcohol in bars and restaurants.
“The deterioration of COVID in some States will remain an overhang for the market, although it would take a sustained increase in the total number of the United States to trigger a dramatic change in the story,” said the founder of Vital Knowledge, Adam Crisafulli, in a note Sunday.
The secretary of the Treasury, Steven Mnuchin, told CNBC Thursday that the closure of the economy for the second time to slow down Covid-19 is not a viable option because it ” will create more damage “.
After the decline of last week, the S&P 500 is down 5.8% year-on-year, still more than 38% from its march lows. The Dow Jones 30 stocks is down 10.2% since the beginning of the year.
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