Dow Futures Lower As Global COVID Cases Hit Record; US Earnings In Focus

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The Monday Market Minute

  • Global stocks grind higher even as coronavirus cases grow at the fastest rate on record last week, with investors focused on corporate earnings growth and extended central bank support.
  • Outbreaks in India and Brazil, as well as a sputtering vaccine rollout in Europe, allow cases to hit 5.2 million last week, the most on record, as variants accelerate the spread. 
  • CDC data shows 84.2 million Americans have now been fully vaccinated against the coronavirus, with around 209.4 million doses administered as of Sunday.
  • S&P 500 earnings are set to grow 31% over the first quarter, with 79 companies, including IBM, Netflix, Johnson & Johnson, Honeywell and AT&T set to report this week.
  • U.S. equity futures suggest a mixed open on Wall Street after of first quarter earnings from Coca-Cola before the bell and IBM after the close of trading.

U.S. equity futures inched higher Monday heading into a busy week for corporate earnings amid optimism over the pace of vaccine rollouts in the United States yet concern for the worrying rise of infections in major economies around the world. 

Data from the Centers for Disease Control and Prevention published Sunday indicated that just over half of the U.S. population has received at least one coronavirus vaccine dose, with 84.2 million completely inoculated and 209.4 million doses administered. 

That puts the U.S. on pace for so-called ‘herd immunity’, and a full re-opening of the world’s largest economy, by the early summer. However, global infections are rising at a troubling rate, with 5.2 million new cases — the most on record — confirmed last week as vaccine campaigns in Europe sputter and larger nations such as India and Brazil continue to suffer outbreaks and new variant developments. 

Oddly, the stubborn nature of the virus has extended bets on central bank support, pushing government bond yields lower and lifting stocks to all-time highs in Europe and elsewhere even as case counts rise and fresh lockdown measures — such as in Canada’s biggest region, the province of Ontario — are put in place.

In the U.S., however, with corporate profits expected to rise 31% from last year to a share-weighted $352.5 billion this quarter, the Federal Reserve pledging low rates and extended bond market support and lawmakers debating a $2.25 trillion infrastructure spending bill, stocks continue to test record highs, with the S&P 500 riding a six-week winning streak and the Dow Jones Industrial Average closing over the 34,000 mark last week.

Futures contracts heading into the start of the Monday trading session suggest a 90 point pullback for the Dow, with the S&P 500 priced for a 10 point dip.

Harley-Davidson  (HOG) – Get Report shares were a notable pre-market mover, rising 8% after posting stronger-than-expected first quarter earnings and boosting its 2021 sales guidance.

The interest-rate sensitive Nasdaq Composite is also set for a 45 point retreat even as benchmark 10-year note yields ease to 1.565% in overnight trading and IBM  (IBM) – Get Report and Netflix  (NFLX) – Get Report earnings this week mark the unofficial start of the tech reporting season.

Bitcoin bounced higher in overnight Asia trading, adding 2.4% to change hands at $57,152 following a weekend plunge that dragged the world’s biggest cryptocurrency to as low as $51,125 amid speculation of a U.S. Treasury crackdown on alleged money laundering in the digital currency market. 

European stocks touched a fresh-all time high of 443.61 points Monday, paced by gains for the CAC-40 in Paris and a modest 0.13% advance in London, while Asia shares hit the highest levels in a month thanks in part to a modest rebound in China and the strongest export data from Japan in at least three years. 

Oil prices slipped lower, however, as the global coronavirus infection increase raised questions over the pace of energy demand growth in the second half of the year, particularly given the fact that OPEC members are set to gradually increase their production rates over the coming months.

WTI contract for May delivery were marked 12 cents lower from Friday’s close in New York to trade at $63.01 per barrel while Brent contract for June, the global benchmark, drifted 10 cents lower to $66.67 per barrel.