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Several states in America have reported recent spikes in COVID-19 cases as measures are eased throughout the country. The market has reacted with a drop.
Stock futures fell in premarket trading on Monday, mostly because discouraging news from European Central Bank president Christine Lagarde who said the Eurozone’s economy could contract more than 12% this year. Also, French Finance Minister Bruno Le Maire stated that the economy’s recovery is an “absolute priority” in the coming months. Futures on the Dow Jones Industrial Average have lost almost 600 points amid the tasks about the second COVID-19 wave.
The early morning action in futures markets happened mostly because investors are worried because of the economy reopening as well as the borders so the new wave of coronavirus is pretty possible.
The Dow and S&P 500 fell by 5.5% and 4.7% last week, respectively, while the Nasdaq went down by 2.3%. All three major equity indexes had pretty terrible week since March 20.
Ed Yardeni, president and chief investment strategist at Yardeni Research, said:
“The meltup may need to take a break, as sentiment has turned too bullish too rapidly. Now that reopening is happening, there’s fear of suboptimal results: less social distancing triggering a second wave of the virus, followed by another round of lockdowns.”
Dow Futures Drop as Rection to Growing COVID-19 Cases
States in the reopening process including Alabama, California, Florida and North Carolina are all seeing an incline in daily new COVID-19 cases. Texas and North Carolina said they have a record number of infections in hospitals as well.
In the meantime, Governor Andrew Cuomo stated that New Yorkers should be cautious and well aware of a second wave of the COVID-19. He stressed the state already got 25,000 complaints regarding the businesses that are violating rules of the phased reopening, threatening to take liquor licenses from bars and restaurants.
On the other hand, Treasury Secretary Steven Mnuchin said closing the economy again in order to stop the coronavirus spread isn’t an option as it will “create more damage.”
William Schaffner, a professor at the Vanderbilt University School of Medicine noted:
“The second wave has begun. We’re opening up across the country, but many, many people are not social distancing, many are not wearing their masks. Many people are simply not being careful, they’re being carefree. That, of course, will lead to more spread of the Covid virus.”
However, he added he “cannot imagine” a second shutdown due to the impact of the first one.
Schaffner also went on to say that wearing masks is “very, very important” and that the government should “persuade and educate” their citizens to make this a “social norm.”
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