Dow Futures Recover 380 Points after Rocky Start of Q2 2020

UTC by Bhushan Akolkar · 4 min read
Dow Futures Recover 380 Points after Rocky Start of Q2 2020
Photo: Depositphotos

The U.S. markets continue to remain volatile amidst the new industrial output report and the jobless report releasing on Thursday. The total COVID-19 infected cases in the U.S. have passed over 200,000 with over 5,000 deaths.

The Dow Jones Industrial Average (DJIA) has a rocky start of Q2 2020. On Wednesday, April 1st, Dow dropped 4.4% or 1000 points closing just below 21,000 levels. Other indices like the S&P 500 and the Nasdaq Composite also dropped to a similar scale. But it seems that Dow Futures have started to recover.

The global markets have remained largely volatile over the last week with Dow Jones and other indices showing sharp movements. Earlier on Tuesday, Dow ended the first quarter with 23% negative returns. This has been one of Dow’s worst-performing quarters in the stock market history.

Not to forget, in the quarter i.e. Q1 2020, Dow made its record-high above 29,000 levels in mid-February. However, the massive COVID-19 outbreak in the U.S. in March, caused the markets to collapse. Dow Jones corrected nearly 40% from its high slipping below 20,000 levels.

The Dow is showing extremely volatile behavior over the last week moving +/- 1000 points around 22,000 levels. On the other hand, the coronavirus cases in the U.S. have been skyrocketing. The total COVID-19 infected cases in the U.S. have passed over 200,000 with over 5,000 deaths. Earlier on Tuesday, President Donald Trump said that the U.S. should prepare for a “very, very painful two weeks.”

The director of the National Institute of Allergy and Infectious Diseases, Anthony Fauci warned that if strict social distancing measures aren’t implemented, the total deaths in the country can spike to 200,000. Thus, it is highly possible that the U.S. can introduce a country-wide shut down in the coming days.

Markets to Remain Volatile, Dow Futures and Others Seem to Recover

Well, in the current situation, no one can accurately predict as to how long this situation will persist and the markets will continue to remain under pressure. Besides, with all this uncertainty, investor participation is likely to go down. Bleakley Advisory Group chief investment officer Peter Boockvar said:

“While April will be an extremely volatile month in terms of both the news flow and stock market reactions, I do think many are anticipating this. What is not priced in I believe because it’s obviously hugely unknown is what is on the other end come May. How contained will this virus spread be by then? To what extent will things begin to reopen, if at all?”

New York Life Investments multi-asset portfolio strategist Lauren Goodwin says that dividend cuts could be on the horizon for the U.S. companies.

On Thursday’s early hours, the Dow futures showed a good recovery while the Asian market looked jittery. The Dow Futures jumped 380 points or 1.83% while the S&P 500 (SPX) futures climbed about 1.71% and Nasdaq (COMP) futures were up 1.27%.

The U.S. is also planning to release its jobless report that could be worse than the previous numbers. Goldman Sachs expects that the jobless claims could explode to 5.5 million.

The U.S. Blames China for Reporting False COVID-19 Numbers

With the COVID-19 virus originating in China’s Wuhan City, the Asian country has successfully managed to come out of it. China’s death toll has dropped significantly over the last few weeks. Since then China has also played an active role in sending doctors and supplies to highly infected countries like Italy and Spain. However, there have also been reports of China sending lower quality masks to them.

The Bloomberg publication has recently revealed that a secret U.S. intel report states that China has underreported its COVID-19 casualties. The claims show that a significant number of patients haven’t been diagnosed while leaving the official data “intentionally incomplete”.

On the other hand, Chinese embassies have upped their rhetoric that the U.S. has shown a delayed response to the crisis. They also stated that the U.S. has failed to help its allies. Beijing’s French embassy said that the entire world has turned up to China for help “when the epidemic started to explode everywhere”. It further added: “It is China who lent a helping hand to more than 80 nations. Not the United States”.

Is China just playing holier-than-thou or is it really the next big country to look upon leaving the U.S. behind?

Commodities & Futures, Indices, Market News, News
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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