Is Second Lock Down Coming?
(Fri, 26 June 2020). Wall Street is nervous about the prospect of new coronavirus restrictions and a second slump in consumer spending. The United States registered a record number of daily new virus cases, sparking speculation of new lockdowns. The Dow Jones Industrial Average (DJIA) struggled on Thursday as the stock market failed to recover from Wednesday’s big plunge.
The U.S. recorded the highest daily increase in new virus cases, prompting fears of new lockdowns. New unemployment claims exceeded estimates once again. Stocks struggled to bounce back from yesterday’s painful sell-off, and the Dow Jones suffered yet another triple-digit setback when trading opened on Thursday. It comes as the United States records its highest daily count of new virus cases.
The numbers sent shivers through Wall Street as traders began bracing for the potential of new lockdowns. Eleanor Creagh, strategist at Saxo Capital Markets, summed up the hesitation of investors. There is real cause for concern, especially as we see hospitalizations mounting in the US, that’s of course raising the prospect of new restrictions. While investors are nervous, health experts are outright terrified. In Arizona, where hospitalizations hit a new high, Dr. Joseph Gerald sent an ominous warning.
Record Virus Cases Send Shivers Through The Stock Market
With a record 36,880 new cases reported across the country yesterday, traders are pulling risk off the table. It’s the highest figure since April 24th, and signals that many states have failed to contain the outbreak. It’s not the outbreak itself, but the possibility of people staying at home, and the change in consumer behavior that worries investors. Victoria Fernandez from Crossmark Global Investments explains that demand is key.
As for further lockdowns, there’s little appetite for wide-scale restrictions. Texas Governor Greg Abbot said the lockdown was a “last option” despite soaring caseloads. Investors are confident that we won’t see broad restrictions again. Adrian Zuercher of UBS Global Wealth Management said intervention would be more “surgical” and local. We don’t expect a wide lockdown as we have seen a couple of months ago.
Is Gold Sending A Warning To The Dow Jones?
With caution setting in across Wall Street, it’s no surprise to see ‘safe have n’ gold climbing again. The rise in gold is perhaps a warning to expect more volatility and perhaps more Federal Reserve intervention. Saxo Capital Markets’ Eleanor Creagh agrees that gold might be a canary in the coal mine.
Gold is very knowing in the fact that there is not going to be a V-shaped recovery in the economy.
Creagh maintains her firm’s position that gold will break out to a new all-time high by the end of the year. That doesn’t mean she’s not bullish on stocks, though. Any pullbacks, she said, were probably blips in the overall uptrend.
Stock Market Focus Today? Unemployment Figures
Initial jobless claims are once again in focus as Wall Street evaluates the success of the U.S. economy’s attempt to grind back to life. Economists anticipated 1.3 million new claims, but the actual data shot past estimates – again. Government statistics recorded 1.48 million new American workers on the jobless rolls – a number that remains stubbornly high despite states reopening. But there was a bright spot in the data. Continuing claims fell by 767,000 to 19.52 million, somewhat below the ~20 million analysts expected.
“Initial and continuing claims point to gradual improvement in the labor market. Falling initial claims signal that the pace of layoffs is slowing, but it still extremely high,” said Gus Faucher, chief economist at PNC Financial.
Also on the agenda today is Nike’s earnings report, due after the closing bell tonight. The company’s fourth-quarter results should give a glimpse into consumption patterns during the pandemic.
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