Stocks are slumping once again as tensions between China and the U.S. stymie the recent optimism around a potential coronavirus vaccine.
Stocks tested Wednesday’s lows in overnight Thursday trading, reaching near the 2900 level in the S&P 500 futures, but bounced prior to the open and are attempting to move higher Friday.
The Dow Jones Industrial Average fell over 200 points overnight as well but has shed 100 points, or 0.42% as of just after 1 pm EST. The S&P 500 is off by 0.13%, while the Nasdaq Composite treading water above breakeven from yesterday’s close.
Stock Index ETFs are slipping today as well, tracking moves in the benchmark stock indexes. The SPDR S&P 500 ETF Trust (SPY), is off by 0.1%, the SPDR Dow Jones Industrial Average ETF (DIA) is 0.4% lower, while the Invesco QQQ Trust (QQQ), is slightly higher, gaining 0.18%
Ed Mills, Washington policy analyst at Raymond James, said the bill is moving at “warp speed,” noting: “We believe there will be a significant push for the legislation to be taken up in the coming weeks, and we believe it is only a matter of time before this bill (or something similar) is signed into law.”
Meanwhile, positive news concerning coronavirus vaccine research may have helped to lift stocks off their lows, as Dr. Anthony Fauci. Fauci, director of the National Institute of Allergy and Infectious Diseases, told NPR on Friday that Moderna’s vaccine data looked “promising.”
Moderna stock, which had been beaten down following news that what at first appeared to be a promising study may not have been as thorough as first anticipated, rallied 3% following those comments. Shares of the biotech company soared surged over 25% Monday after it released positive results from preliminary human tests of its vaccine candidate for the coronavirus. According to the company, the vaccine generated Covid-19 antibodies in all 45 participants.
In words sure to have made President Trump happy, Fauci also later told CNBC’s “Halftime Report” he is “enthusiastic” about the economy reopening.
“We can’t stay locked down for such a considerable period of time that you might do irreparable damage and have unintended consequences, including consequences for health,” said Fauci. “It’s for that reason that the guidelines have been put forth so that the cities and states can start to reenter a reopen.”
Despite the overnight drop, the Dow was still over 3% higher week to date and was headed for its biggest one-week gain since the week of April 9. Meanwhile, the S&P 500 has climbed 2.96% this week while the Nasdaq Composite is up 3% in that time, as optimism over reopening largely overshadows fears of more death and infection.
“The future remains uncertain, and thus, we are not confident in saying a second wave cannot happen — but the good news, there has yet to be a second wave in re-opened economies,” said Tom Lee, founder and head of research at Fundstrat Global Advisors, in a note. “We remain in the half-full camp and believe stocks offer pretty good risk/reward, even here.”
President Donald Trump also said Thursday night “we are not closing our country” given that a predicted second wave of coronavirus infections ravages the U.S. “We can put out the fires. Whether it is an ember or a flame, we are going to put it out. But we are not closing our country.”
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