Stock futures fall due to fears of new Covid variant found in South Africa

A trader works on the floor of the New York Stock Exchange (NYSE) on November 8, 2021.

Brendan McDermid | Reuters

US stock futures fell overnight on Thursday as investors prepared for a shortened trading day amid renewed Covid fears of a new variant found in South Africa.

Futures for the Dow Jones Industrial Average fell more than 400 points, while those for the S&P 500 and Nasdaq 1[ads1]00 were both in negative territory.

The downward movement in futures came after WHO officials on Thursday warned of a new Covid-19 variant discovered in South Africa. The UK temporarily suspended flights from six African countries due to the variant.

The markets were closed on Thursday due to Thanksgiving, so the shares are coming out of small gains on Wednesday which stabilized the week’s losses for the S&P 500 and Nasdaq Composite.

Treasury interest rates have risen this week, putting pressure on high-growth stocks. Nasdaq is down 1.3% for the week, while the S&P 500 is up less than 0.1% and the Dow has gone up about 0.6%.

The last weeks of the year are usually a strong period for the market, with the so-called Santa Claus rally usually creating a happy holiday for Wall Street. The S&P 500 is up 25% so far this year.

“I think we are probably in a market that is in its infancy in the next few weeks until we get to the next one [Fed’s Federal Open Market Committee] meeting, “said Yung-Yu Ma, investment strategist at BMO Wealth Management.” I think spending is going to be strong at the consumer level … I think when we see the job report from November coming out in mid-December, I think it will be beneficial . “

“I think the potential for recalibration, reassessment or a market reassessment is most likely when FOMC makes its announcements on [Dec. 15]. Until then, we want much more of what we already know, “Ma added.

Friday also marks the unofficial start of the Christmas shopping season, as investors will look for insights from Black Friday to determine the mood of the US consumer.

Retail stocks have seen dramatic movements in both directions during this earnings season. On Wednesday, the shares of Gap and Nordstrom fell more than 20%, but Kohl’s jumped more than 10% a week ago after reporting strong sales growth.

Retail leaders talked during the quarter about how to deal with supply chain problems and inflation. It also remains to be seen whether discussion around supply chain issues led consumers to start shopping on holiday early, which could potentially have slashed sales in the fourth quarter.

“I would not be surprised if there was a dynamic around the holidays,” said Sarah Henry, a portfolio manager at Logan Capital Management. She added that her company was looking for companies with long-term strategic advantages rather than trying to focus on the best holiday sales results.

Wednesday also saw several strong economic reports, with personal income and consumption spending for October higher than expected and initial unemployment claims reaching their lowest level since 1969. However, Core PCE, the Fed’s preferred inflation measure, remained high at 4.1%.

There are no major financial releases scheduled for Friday. The stock exchange closes at 13.00 ET on Friday due to the holiday weekend.

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