Dow futures fall more than 350 points after Trump says he tested positive for coronavirus

Dow futures dropped Friday after President Donald Trump and first lady Melania Trump tested positive for coronavirus.

Futures tied to the Dow Jones Industrial Average lost 356 points, or 1.3%. The move indicated an opening loss of more than 300 points. S&P 500 futures fell 1.4%. Nasdaq-100 futures declined 1.9%.

The president’s diagnosis added more uncertainty to the election, an event that was already weighing on the market and keeping traders on edge as they attempted to evaluate the possible outcomes. Shares of stocks tied to the economy reopening fell in premarket trading as the news highlighted the risk of a second wave of the coronavirus and raised fears that maybe lawmakers would slow the pace at which they relaxed coronavirus measures.

Investors will “debate the implications this has for stimulus, reopening, and the election,” wrote Vital Knowledge’s Adam Crisafulli in a note. “Politically speaking, the Trump diagnosis (like the debate) is affirming and likely cements Biden’s poll lead.”

White House physician Dr. Sean Conley said in a memo, “The President and First Lady are both well at this time, and they plan to remain at home within the White House during their convalescence.”

Conley also said he expects Trump to “continue carrying out his duties without disruption while recovering.”

The Trump tweet initially knocked down Dow futures about 500 points in overnight trading, and contracts were off their worst levels as traders digested the news.

Dow futures overnight

Shares of cruise lines and airlines were the biggest losers in premarket trading. Royal Caribbean fell 5%. United Airlines lost 4.7%. 

“It really brings into stark reality that we are potentially going into … a second wave,” said Jeff Henriksen, co-founder and CEO of Thorpe Abbotts Capital, to CNBC’s “Squawk Box Europe.”  “President Trump getting this really highlights that in a way that I think it will focus attention back on the virus and the effects it will have.”

Technology shares also declined in premarket trading. Apple fell 3% and Tesla lost 5%. Technology shares could come under pressure under a Democratic sweep scenario if it leads to higher tax rates, many strategists have said.

Traders were also watching the status of stimulus negotiations between Democrats and Republicans. The House passed the $2.2 trillion Democratic coronavirus stimulus bill Thursday night, but Republicans oppose this package. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to continue to have talks on a bipartisan agreement.

The president’s illness could perhaps “jumpstart the stimulus that seems to have been bogged down,” said Tom Block, policy strategist at Fundstrat Global Advisors, on CNBC’s Squawk Box. “It hits home that this is not going away.”

The sell-off in oil prices intensified as Trump’s news added to the industry’s demand concerns. West Texas Intermediate crude, the U.S. oil benchmark, slid 4% to $37.10 per barrel on Friday.

Investors will get a read on the state of the ongoing labor market recovery when September’s jobs report is released at 8:30 a.m. ET. The final jobs report ahead of the election is expected to show a slowdown from August’s levels. Economists surveyed by Dow Jones are expecting 800,000 nonfarm payrolls added, down from 1.37 million in August.

Stocks have staged a record rebound since the economic shutdown sent stocks tumbling in March. But the major averages all finished September lower, snapping a five-month win streak, as doubts emerge about the pace and breadth of the recovery.

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—CNBC’s Christine Wang and Elliot Smith contributed to this report.

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