(Photo by JOHANNES EISELE/AFP via Getty Images)
AFP via Getty ImagesU.S. stock futures dipped Sunday evening as markets were set to open lower for the coming week.
After both the S&P 500 and Dow Jones Industrial Average posted their best month in decades in April, the rally seems to be taking a break. Dow Jones Industrial Average futures lost 0.9% Sunday evening, S&P 500 futures were down 0.9%, and the Nasdaq Composite’s futures fell 0.5%.
Investors are nervously watching how the partial reopening of the U.S. economy will affect the nation’s battle against the Covid-19 pandemic. A hopeful Covid-19 treatment might be in the hands of doctors and patients as early as this week. And small businesses continue to compete over funds from the Paycheck Protection Program, whose second-round funding is going fast again and a third round might be needed.
After staying under lockdown for weeks, more than half of U.S. states have partially reopened or are set to do so in the coming week, lifting social-distancing restrictions, opening parks and beaches, and allowing some nonessential businesses to go back to work. Some are worried the reopening might bring about a second wave of infections. White House health advisor Dr. Anthony Fauci warned last week that the U.S. could see a bad fall and a bad winter if it’s unprepared, which he said could “get us right back in the same boat that we were a few weeks ago.”
President Donald Trump on Sunday said Americans can have it both ways—with some going back to work and others continuing to be careful about the coronavirus. Asked about the split with some Americans protesting lingering closures and others scared to go back to work, Trump replied: “I think you can really have it both ways.”
The people who want to “stay back,” can stay back, he said. It might be a good idea for people over 60 to continue to stay inside, he said. Trump’s comments came during a virtual town hall on Fox News with the Lincoln Memorial as a backdrop.
More half of S&P 500 companies have reported first-quarter earnings as of last week. The actual results, combined with estimated numbers for companies that have yet to report, suggest that the companies in the index will see a nearly 14% year-over-year decline in first-quarter earnings, according to FactSet. Many companies have withdrawn their previous guidance due to coronavirus-induced uncertainties, while analysts have lowered their second-quarter earnings estimates for S&P 500 companies by 28.4% in the month of April. Still, stock prices have been moving the opposite direction, rallying throughout the month to push forward price-to-earnings ratio to the highest level since 2002.
On a positive note, the Food and Drug Administration has granted emergency-use authorization to Gilead Science’s (ticker: GIL) antiviral drug Remdesivir, which has shown success in helping coronavirus patients recover faster in early trials. In a Sunday interview, Gilead CEO Daniel O’Day said Remdesivir could be available to coronavirus patients as early as this week, noting the biotech company has donated the entire supply and is working with the government to determine which cities are most vulnerable and where the patients are that need this medicine.
The Paycheck Protection Program for small businesses impacted by the coronavirus pandemic continues to receive applications, after the loan program was assigned another $310 billion last week under the latest relief package. The initial $349 billion allocation was depleted in a matter of days amid overwhelming demand and the second tranche of money seems to be on the same course. National Economic Council Director Larry Kudlow said on Sunday that a third-round funding for the loan program might be needed, but the White House has made no decision yet.
Write to Evie Liu at evie.liu@barrons.com
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Stock Futures Fall as Investors Watch Reopening of the Economy - Barron's
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