U.S. Stocks Mixed After Turbulent Weekend

U.S. Extends Virus Containment Mesures Until April 30, 2020

S&P 500 futures are swinging between gains and losses ahead of the first trading session of the new week. Over the weekend, the total number of coronavirus cases in the U.S. increased to more than 143,000 according to data from Johns Hopkins University.

This increase has pushed the U.S. President Donald Trump to extend the stay-at-home guidelines until the end of April. Previously, President Trump wanted to reopen the economy by Easter, but coronavirus data showed that things are getting worse, and early reopening of the economy is impossible.

The situation remains challenging in other countries, since Italy has accumulated 97,689 cases, while the spread of the virus in Spain intensified, and the total number of coronavirus cases stands at 85,195.

Will Record Liquidity Injections Help The Market?

On Friday, U.S. stocks dropped following a major rally. As I wrote at that time, traders have likely anticipated that they will read bad news when they come to their desks on Monday and decided to take some profits.

Now that they have seen these bad news about further spread of the coronavirus and an upcoming month of virus containment measures, market participants are undecided on the future direction of the market.

On the one hand, the U.S. is facing recession. A month of virus containment policies will lead to a massive loss of jobs, some of which will not be restored anytime soon.

The multinational companies are also getting a big blow since virus containment measures are implemented everywhere in the world. Put simply, the whole world economy is heading into a material resession.

On the other hand, the Fed and the government are providing an unprecedented amount of liquidity to support the market. Following the financial crisis of 2008-2009, massive liquidity injections have supported stocks and led to a major rally which ended only when coronavirus hit the world.

Stocks To Watch

Trading action in the biggest U.S. stocks by market capitalisation will likely set the tone for the upcoming trading sessions, so it’s worth watching whether Microsoft, Apple, Amazon, Alphabet, Facebook and other big names can hold near their recent levels.

Russell 2000 Index, which contains more companies than the big-ticket S&P 500, has been underperforming the benchmark index during this crisis. If the stocks of the biggest companies cannot hold on to their gains, traders and investors should expect material weakness in smaller stocks.