Market Snapshot: Dow futures under pressure as Wall Street digests bank stress test and record rise in coronavirus cases

U.S. stock-index futures were mostly lower early Friday and are likely to finish the week with muted returns, as investors parsed a record rise in new coronavirus cases and the implications of Federal Reserve bank stress test results announced late Thursday.

How are benchmarks performing?

Futures for the Dow Jones Industrial Average
YM00,
-0.57%

YMU20,
-0.57%

traded 153 points, or 0.6%, lower at 25,447; those for the S&P 500 index
ES00,
-0.22%

,
ESU20,
-0.22%

retreated 6.70 points, or 0.2%, at 3,064.25; while Nasdaq-100 futures
NQ00,
-0.05%

NQU20,
-0.05%

lost 6 points to reach 10,082.25, a decline of about of 0.1%.

For the week, the Dow
DJIA,
+1.17%

and S&P 500
SPX,
+1.09%

were both looking at weekly losses of 0.5%, while the Nasdaq Composite Index
COMP,
+1.08%

was on pace to advance 0.7% for the period, as of Thursday’s close.

What’s driving the market?

Stock-market investors have wrestled with rising daily rates of new U.S. coronavirus cases all week, while noting a slow improvement in economic data, leading the equities market to reflect expectations for a V-shaped economic recovery.

On Thursday, U.S. states saw a single-day record rise of 37,000 in infections, led by Florida, Texas, California and Arizona, surpassing the 36,188 level from April 24, according to analysis of data from Bloomberg, compiled by Johns Hopkins University.

Overall, total cases in the U.S. have topped 2.4 million and that increase, notably in southern and western states in the U.S., and has resulted in governors halting business reopening plans in Texas, North Carolina, Louisiana and Kansas. However, governors in New York, New Jersey and Connecticut are proceeding with reopening efforts but imposing a 14-day quarantine for visitors coming from some southern states.

Investors are also digesting the results of the Federal Reserve’s annual bank stress tests which requires banks to preserve capital by suspending share repurchases and cap dividend payments in the third quarter based on average net income over the past four quarters.

However, financial institutions got a boost on Thursday after the Federal Deposit Insurance Commission and Office of the Comptroller of the Currency said they are planning to loosen the restrictions imposed by the Volcker rule and allow banks to more easily make large investments into venture capital and similar funds, among other rule rollbacks.

Check out: MarketWatch’s Need to Know column:Why one strategist is actually encouraged by the latest coronavirus data showing a spike in new cases

In Europe, Christine Lagarde, president of the European Central Bank, said the worst of the COVID-19 pandemic may have passed. “We probably have passed the lowest point and I say that with some trepidation because of course there could be a second wave,” speaking during a summit on Friday. Lagarde did, however, warn that some of the economy could be permanently impacted.

After a gross domestic product contraction of 8.7% for 2020, the ECB estimates economic growth of 5.2% in 2021, and 3.3% in 2022.

In U.S. economic reports, consumer spending climbed in May to a record 8.2% after tumbling in April, as consumers, representing two-thirds of economic demand, used stimulus checks provided by the government to help Americans deal with job losses during the pandemic. However, personal incomes dropped, according to the report.

A final reading on consumer sentiment for June from the University of Michigan is due at 10 a.m., with estimates for a reading of 78.9.

Which stocks are in focus?
  • Nike Inc.
    NKE,
    +1.31%

    swung to a fourth-quarter loss and total sales dropped 38% despite a jump in online sales. The quarter’s online sales rose 75% with “strong double-digit increases” across geographies and made up about a third of total revenue for the quarter.

  • Amazon.com Inc.
    AMZN,
    +0.73%

    announced that it was purchasing self-driving car company Zoox for more than $1 billion, according to reports.

  • Shares of Gap Inc.
    GPS,
    -2.49%

    were in focus after the retailer reported that it was teaming up with hip-hop star Kanye West.

How are other assets performing?

West Texas Intermediate U.S. crude
CLQ20,
-1.18%

retreated 47 cents, or 1.1%, to $38.25 a barrel on the New York Mercantile Exchange. In precious metals, gold futures
GCM20,
+0.14%

edged $1.10, or 0.1%, lower at $1,769.90 an ounce.

The 10-year Treasury note yield
TMUBMUSD10Y,
0.661%

fell 1.3 basis points to 0.66% amid inflows into safe-haven assets. Bond prices move inversely to yields.

The greenback was virtually unchanged against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index.
DXY,
+0.00%

In global equities, the Stoxx Europe 600 index
SXXP,
+0.96%

gained 1.1% and London’s FTSE 100
UKX,
+1.44%

rose 1.5%.

In Asian markets, the Japanese Nikkei
NIK,
+1.13%

gained 1.1%, Hong Kong’s Hang Seng
HSI,
-0.93%

lost 0.9%, while South Korea’s Kospi advanced 1.1%. Markets in China were closed for a holiday.

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