U.S. Stocks Set To Open Lower On Virus Worries And Stimulus UncertaintyS&P 500 futures are losing ground in premarket trading as traders are worried about the increasing number of new coronavirus cases in the U.S.
Virus Fears Put Pressure On Stocks
S&P 500 futures are losing ground in premarket trading amid worries about the second wave of the virus in the U.S. where the number of new COVID-19 cases touched record levels over the weekend.
The second wave of coronavirus is already very strong in Europe. Yesterday, France reported more than 52,000 cases while the number of new infections in Italy and UK was close to 20,000.
The second wave in the U.S. will be coming from a higher base compared to European countries so the risk of a strong increase in the number of new cases is high. Not surprisingly, traders are worried that the worsening situation on the virus front will lead to new anti-virus measures which will hurt the economy.
Stimulus Negotiations Yield No Results
U.S. Republicans and Democrats failed to reach consensus on the new coronavirus aid package over the weekend and will continue their negotiations on Monday.
U.S. House Speaker Nancy Pelosi stated that the White House was studying the latest Democrats’ proposal and that response was expected on Monday.
Recent PMI reports indicated that both Manufacturing PMI and Services PMI were increasing in the U.S. However, this trend could quickly reverse course if U.S. lawmakers fail to provide another round of stimulus to the economy.
Oil Settles Below The $40 Level
Oil has shown strength in recent trading sessions as traders ignored the second wave of coronavirus in Europe and focused on the longer-term outlook for oil demand.
However, the potential second wave of the virus in the U.S. could put significant pressure on oil and push it towards October lows below the $37 level.
Most likely, today’s trading session will be very volatile for oil-related equities as traders will react to oil’s recent move. Major oil companies like Exxon Mobil and Chevron are already losing ground in premarket trading, and a combination of catalysts which include virus fears, falling oil prices and stimulus uncertainty could lead to a material sell-off.
For a look at all of today’s economic events, check out our economic calendar.