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Stock Futures Drop on Fed Caution, Virus Warning: Markets Wrap

Stock Futures Drop on Fed Caution, Virus Warning: Markets Wrap

(Bloomberg) — U.S. and European stock futures slumped along with Asian shares Thursday after the Federal Reserve painted a long slog ahead for the economic recovery and after data showing a rise in infection rates in some U.S. states.

Futures on the S&P 500 dropped more than 1% and European contracts were down over 2%. Treasuries consolidated gains made in the wake of the Fed decision, which featured fresh projections including an outlook for no interest-rate hikes through 2022. The dollar rebounded from Wednesday losses. Crude oil tumbled. Coronavirus cases have now surpassed 2 million in the U.S., and Texas saw the biggest jump yet.

On Wednesday, stocks whipsawed after the Fed left its policy settings unchanged and pledged to keep buying bonds. Chair Jerome Powell said the central bank had a briefing on yield-curve control, amid expectations from some economists that the Fed will follow Australia and Japan in adopting such a tool.

Still, the Nasdaq Composite closed at a record high Wednesday. Global equities remain up about 40% from their March lows as central-bank asset purchases and unprecedented stimulus sparked demand for risk assets. Treasury Secretary Steve Mnuchin said that the U.S. “definitely” needs additional fiscal stimulus, supporting prospects for another round this summer.

What to watch this week:

Euro-area finance ministers meet Thursday to discuss the EU’s recovery package and Eurogroup presidency succession.

These are some of the main moves in markets:

Stocks

Futures on the S&P 500 fell 1.3% as of 7:16 a.m. in London. The index dipped 0.5% Wednesday.Euro Stoxx 50 futures lost 2.2%.MSCI Asia Pacific Index fell 1.8%.

Currencies

The yen was flat at 107.11 per dollar.The offshore yuan fell 0.2% to 7.0683 per dollar.The Bloomberg Dollar Spot Index rose 0.5% after falling 0.5% Wednesday.The euro bought $1.1355, down 0.2%.

Bonds

The yield on 10-year Treasuries was at 0.71% after sliding Wednesday.Australian 10-year yields dipped to 0.93%.

Commodities

West Texas Intermediate crude slid 4% to $38.03 a barrel.Gold was at $1,728 an ounce, down 0.6%.

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