U.S. stock-index futures tumbled early Thursday as investors worried about signs of coronavirus cases rising again and digested Wednesday’s downbeat economic outlook from the Federal Reserve.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average
YM00,
-2.42%

YMM20,
-2.42%

were off 555 points, or 2.1%, at 26,409, those for the S&P 500 index
ES00,
-2.08%

ESM20,
-2.08%

were declining 54.25 points, or 1.7%, at 3,131.75, while Nasdaq-100 futures
NQ00,
-1.64%

NQM20,
-1.64%

gave up 132 points, or 1.3%, at 9.955.25.

On Wednesday, the Dow
DJIA,
-1.03%

fell 282.31 points, or 1%, to end at 26,989.99. The S&P 500
SPX,
-0.53%

shed 17.04 points, or 0.5%, finishing at 3,190.14. The Nasdaq Composite
COMP,
+0.66%

climbed 66.59 points, or 0.7%, to close at a record 10,020.35 high.

What drove the market?

The number of U.S. coronavirus infections passed the two million mark and over 112,000 have died, according to Johns Hopkins University. Despite fewer cases being recorded in some cities and states, the seven day average of new cases over the last two weeks is still rising in more than 20 states, leading investors to worry about a second wave of the epidemic just as business activity is resuming.

The global case tally for the coronavirus climbed to 7.39 million on Thursday, according to data aggregated by Johns Hopkins University. The death toll rose to 417,022. More than 3.5 million people have recovered.

“Up until yesterday financial markets didn’t appear overly concerned about the prospect of a second wave,” said Michael Hewson, chief market analyst at CMC Markets UK, in a Thursday research note. However, he noted that the “prospects, appear to have concentrated minds in the wake of recent gains, and sending the usual suspects of travel, as well as oil and gas stocks sharply lower”

Meanwhile, on Wednesday the Fed’s updated policy statement and projections indicate that it expects a 6.5% contraction by the end of the year on a year-over-year basis, with the unemployment rate ending at 9.3%, well above the Fed’s estimate of the long-run rate forecast of 4.1%.

Naeem Aslam, chief market analyst at AvaTrade, in a Thursday research note said that “lack of Fed’s confidence in the US economic recovery is also impacting the S&P500 futures and the risk-on sentiment.”

A RECAP OF THE FED: Fed provides update on economic outlook and policy thinking

The market will gain more information about the state of the economy when the U.S. weekly jobless claims report is released at 8:30 a.m. Eastern and producer price index data is published. Expectations are for 1.565 million people seeking unemployment benefits for the week, according to average estimates of economists surveyed by Econoday.

Although new jobless claims have been falling since March, more than 2.2 million applications for unemployment compensation were filed in the last week of May through state and federal relief programs. That is almost as many as the 2.5 million jobs regained by the economy in the entire month.

Looking ahead, investors also will watch an update on the Fed’s balance sheet, which hit $7.21 trillion last week, and the money supply at 4:30 p.m. Eastern.

How are other assets faring?

Oil prices traded lower on Thursday, as the Fed promised to keep rates near zero. West Texas Intermediate
CLN20,
-4.16%

lost $1.26 cents, or 3.2%, trading at $38.34 a barrel on the New York Mercantile Exchange.

The greenback picked up 0.2% against its major rivals, as gauged by the ICE U.S. Dollar index
DXY,
+0.30%
.

In precious metals, August gold
GCM20,
+1.32%

on Comex gained $18.20, or 1.1%, at $1,738.90 an ounce.

The 10-year Treasury note yield
TMUBMUSD10Y,
0.699%

fell 4.8 basis points to 0.70%. Bond prices move in the opposite direction of yields.

In global equities, the Stoxx Europe 600 index
SXXP,
-2.46%

closed down 0.4%, while the FTSE 100 index
UKX,
-2.32%

shed 0.1%.

In Asia, Japan’s Nikkei
NIK,
-2.82%

tumbled 2.2% higher, the FTSE 100 index
UKX,
-2.32%

declined 1.1%. China CSI 300
000300,
-1.08%

finished up 1.1% lower and Hong Kong’s Hang Seng Index
HSI,
-2.27%

closed off 2.3%. South Korea’s Kospi index
180721,
-0.86%

retreated 0.9%.


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