US stocks will be in focus today, with the country reporting a massive increase in coronavirus cases.
Context: US stocks closed lower on Friday, as the approval by Congress of the mammoth coronavirus stimulus package failed to lift investor sentiment. For the week, however, most stocks posted gains, recovering some of the steep losses recorded this month
Details: The Dow moved lower on Friday, after recording the strongest three-day rise since 1931 on Thursday. Despite Friday’s downturn, the Dow recorded an impressive 12.8% weekly increase, representing its best week since 1938. The House of Representatives approved a $2 trillion stimulus package on Friday, with President Donald Trump signing the legislation into law.
The Dow tumbled over 900 points to settle at 21,636.78 on Friday. The S&P 500 index declined 3.4% to 2,541.47, while the Nasdaq 100 slipped 3.8% to end the trading day at 7,502.38.
Last week’s rebound in the US stock market was driven by the country’s stimulus plan and the Fed’s monetary policy easing announcement. However, there could be significant pressure on equities in coming weeks, as coronavirus cases and deaths are continuing to rise in the US and economic reports are likely to depict the impact of lockdown in various parts of the country.
The US has become the epicentre of COVID-19, reporting more cases than China. The country has over 143,000 confirmed cases of the disease, versus around 82,100 in China. On Sunday, President Donald Trump announced an extension of the social distancing guidelines till April 30 to control the country’s death toll.
In economic news, consumer spending rose 0.2% in February, while the final reading of the University of Michigan’s consumer sentiment index dipped to 89.1 in March. Meanwhile, the yield on the 10-year US treasury note fell 13.3 basis points to trade at 0.679%, while WTI crude tumbled 4.8% to $21.51 on the NYMEX.
What to watch: US stocks are expected to extend Friday’s downward momentum today, with the country reporting a strong rise in daily coronavirus cases. US stock futures are also pointing towards a lower open on Wall Street. Investors will look out for economic reports from the country today. The US pending home sales, which rose 5.7% in January, is expected to rise 1.7% in February. The Dallas Fed manufacturing index is also due today.
Other Market: European indices were trading lower at 9:00am GMT, with the FTSE 100, German 30 and French 40 down 2%, 1.4% and 2.6%, respectively.