By Peter Nurse
Investing.com - U.S. stocks are set to open sharply lower Monday, continuing last week’s selloff, amid fears a second wave of the Covid-19 virus will stunt growth just as the economy starts to recover.
At 7 AM ET (1100 GMT), S&P 500 Futures traded 65 points, or 2.2%, lower, Nasdaq 100 Futures down 159 points, or 1.7%. The Dow Futures contract fell 656 points, or 2.6%.
Several states in America, including some of the most populous, have reported recent spikes in Covid-19 cases as social distancing measures are eased throughout the country.
There were also signs over the weekend of a resurgence of cases in China, where the virus was first noted, and in Japan, the second and third largest economies in the world, respectively.
The Dow Jones Industrial Average cash index and S&P 500 lost 5.5% and 4.7% last week, respectively, while the NASDAQ Composite shed 2.3%. All three major equity benchmarks suffered their worst week since March 20.
Of major interest this week will be Fed Chairman Jerome Powell’s testimony before Congress on Tuesday and Wednesday.
Last week the Fed indicated that it plans years of extraordinary support for an economy facing a long hard recovery from the coronavirus pandemic, with policymakers projecting the economy to shrink 6.5% in 2020 and the unemployment rate to be 9.3% at year’s end.
In corporate news, the oil sector will be in the spotlight after BP (NYSE:BP) said it was taking up to $17.5 billion in charges. The crude giant added the pandemic was having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period.
Additionally, Walmart (NYSE:WMT) and Shopify (NYSE:SHOP) will be in focus after announcing a strategic partnership over the weekend as the big box retailer aims to bolster its position in e-commerce.
Meanwhile, bankrupt car rental firm Hertz Global (NYSE:HTZ) filed to issue up to $500 million in common stock in a move that will test the strength of demand from retail investors who have pumped it up in recent days. Hertz stock, which rose from 83c to $5.53 in a matter of days, was indicated down 20% in premarket trading.
Oil prices sold off Monday, as new coronavirus infections add to concerns that a resurgence of the virus could weigh on the recovery of fuel demand.
U.S. crude prices fell 2.2% to $35.47 a barrel, while Brent Futures dropped 1.2% to $38.25.
Elsewhere, gold futures fell 1.4% to $1,713.75/oz, while EUR/USD traded at 1.1244, down 0.1%.