Stock futures flat after market sell-off amid uptick in Covid cases

U.S. stock futures were flat in overnight trading on Monday following the market’s massive sell-off.

Fueling the weakness is a surge in Covid-19 cases in the U.S. and abroad, compounded with little hopes of a stimulus package from Washington.

Dow futures rose 20 points. The S&P 500 and Nasdaq gained 0.07% and 0.1%, respectively.

On Monday, equities plunged in their worst session since September amid a surge in Covid-19 cases across the country. The Dow Jones Industrial Average fell nearly 650 points, for its worst day since Sept. 3 and closing below 28,000 for the first time since Oct. 6.

The S&P 500 lost 1.86% on Tuesday, dragged down by stocks that hinge on a reopening of the economy like airlines, cruise lines and retailers. The technology-heavy Nasdaq Composite fell 1.64%.

Stocks did close off their lows with the Dow falling more than 950 points at one point in the session.

Friday and Saturday saw cases spike above 83,000, according to data from Johns Hopkins University. The data on Sunday also showed the country has reported a record average of 68,767 cases per day over the past seven days.

“This sell-off, whatever the rationale, was well-telegraphed. It was the consensus that we were going to have a pullback before the election. A number of strategists suggested it. Technical indicators indicated we were going to have it,” Quincy Krosby, Prudential Financial chief market strategist, told CNBC.

Wall Street is also monitoring coronavirus aid package negotiations. House Speaker Nancy Pelosi’s spokesman said on Twitter that the Democratic leader remains “optimistic” about a pre-election deal after Monday’s phone call with Treasury Secretary Steven Mnuchin. However, spokesman Drew Hammill said that Democrats are still waiting on the White House to accept its language around Covid-19 testing and that “our progress depends on Leader McConnell agreeing to bipartisan, comprehensive legislation.” 

With the presidential election only a week away, Fundstrat Washington policy strategist Thomas Block told clients, “it looks like the clock has run out” on a second Covid-19 stimulus bill for now. Block also said the the period of time after a November election and before the beginning of the new Congress is “not very productive, especially if the election results in a change to lineup for the coming year.”

With less than a week of trading left in October, the Dow is down slightly for the month and the S&P 500 and Nasdaq are up 1.1% and 1.7%, respectively.

“The biggest risk appears to be the threat of a contested election and the country not knowing the winner of the Presidential election next Tuesday night,” Brian Price, Head of Investment Management for Commonwealth Financial Network, told CNBC.” I think that investors are taking some chips off the table or increasing their hedging positions in advance of what could be a tenuous period for risk assets.”

A slew of large-cap companies report quarterly earnings on Tuesday with manufacturing giant’s 3M and Caterpillar set to release before the bell. Healthcare giants Eli Lilly, Merck & Co., and Pfizer also report before the opening bell. BP, Harley-Davidson, JetBlue and Raytheon Technologies also report Tuesday morning.

Wall Street is also gearing up for Microsoft earnings after the bell on Tuesday. The technology giant saw revenue grow 13% last quarter despite the pandemic. Advanced Micro Devices and Chubb also report following the close on Tuesday.

The Conference Board’s Consumer Confidence Index for October will be released at 10 a.m. ET on Tuesday. Analysts polled by FactSet are expecting a reading of 102.3, after September’s reading of 101.8.

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