Dow Futures 145 Pts Lower as Covid-19 Surge Tempers Earnings Optimism

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By Peter Nurse – U.S. stocks are seen opening largely lower Monday ahead of the start of the new quarterly reporting season, with key inflation data and testimony from Federal Reserve chair Jerome Powell also due.

At 7:05 AM ET (1105 GMT), the contract was down 145 points, or 0.4%, traded 10 points, or 0.2%, lower, while gained 30 points, or 0.2%.

The three major indices closed at record highs on Friday, rebounding after Thursday’s sharp selloff. However, Wall Street is expected to give back some of these gains Monday, with the exception of the high growth tech stocks, on concerns about the spread of the highly-transmissible delta strain of the Covid-19 virus. The U.S. recorded its highest daily total of new cases since May over the weekend.

Also of interest will be the start of the quarterly earnings season, with the likes of Goldman Sachs (NYSE:), JPMorgan Chase (NYSE:) and PepsiCo (NASDAQ:) set to start the ball rolling on Tuesday.

The estimated earnings growth rate for the for the second quarter is just over 65% from the same period a year ago, according to data from Refinitiv, which would be the strongest earnings growth since the fourth quarter of 2009. The year-on-year numbers will be boosted in the main by extremely weak comparable results from a year ago.

Additionally, the U.S. is scheduled to release key for June later this week, while Federal Reserve Chairman Jerome Powell is set to testify in front of Congress on Wednesday and Thursday, potentially providing clues on the central bank’s thinking over tapering.

In the corporate sector, Virgin Galactic (NYSE:) stock rose 7.3% in premarket after the company successfully completed its first full-crew spaceflight over the weekend, an important step towards the launch of a commercial space tourism service next year.

Walt Disney (NYSE:) will also be in focus after its Black Widow movie grossed $218 million on its debut weekend, with some $60 million of that generated by distribution through the Disney+ streaming channel. 

Elsewhere, oil prices also weakened Monday given the rising Covid-19 cases and the uncertainty following the lack of agreement at the last meeting of the Organization of the Petroleum Exporting Countries and their allies over production levels.

However, prices remain at elevated levels with U.S. officials reporting hefty drops in the nation’s crude inventories and soaring gasoline demand.

At 7:05 AM ET, futures traded 1.7% lower at $73.26 a barrel, while the contract fell 1.5% to $74.39.

Additionally, fell 0.6% to $1,800.70/oz, while traded 0.2% lower at 1.1849.


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