Stock-index futures trade mixed as COVID restrictions threaten recovery

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Stock-index futures were mixed Friday as rising COVID-19 cases raised doubts about the prospects for the economic recovery, offset partly by optimism over prospects for vaccines.

The Treasury Department’s decision to allow emergency Federal Reserve programs expire, however, were a potential negative, analysts said.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average YM00 fell 46 points, or 0.2%, to 29,397.
  • S&P 500 futures ES00, -0.22% were off 3.60 points, or 0.1%, at 3,576.50.
  • Nasdaq-100 futures NQ00, +0.00% rose 18.50 points, or 0.2%, to 12,005.50.

Stocks eked out gains in a choppy trading session on Thursday:

  • The Dow DJIA, +0.15% rose 44.81 points, or 0.2%, to close at 29,483.23.
  • The S&P 500 SPX, +0.39% gained 14.08 points, or 0.4%, to finish at 3,581.87.
  • The Nasdaq Composite COMP, +0.87% ended at 11,904.71, a rise of 103.11 points, or 0.9%.
What’s driving the market?

After a week in which stock investors reverted to old trends of buying large-capitalization technology-related stocks on the back of fresh coronavirus restrictions, the market, on Friday, cued in on an apparent rift between the Treasury Department and the Federal Reserve as another possible source of friction.

Late Thursday, Treasury Secretary Steven Mnuchin said he wouldn’t approve the extension of several emergency loan programs set up with the Fed during the worst days of the financial turmoil created by the pandemic earlier this year.

The Fed responded that it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

Need to Know: What’s next for markets after Treasury Secretary Steven Mnuchin pulls the $455 billion plug

“The emergency lending facilities have been little-used, but their existence has been key in ensuring a credible safeguard against financial market stress,” said Gregory Daco, chief U.S. economist at Oxford Economics, in a note.

Read: S&P 500 can reach 4,500 by the end of 2021, predicts JPMorgan analysts

“With the Covid-19 crisis worsening and activity slowing in the absence of fiscal aid, the decision to curtail the Fed’s firepower could unsettle markets and exacerbate economic stress,” he said.

Mnuchin was set to appear on CNBC, where he might provide further insights on the Treasury’s thinking.

Meanwhile, trading over the week has been uneven as investors weighed optimism over progress toward COVID-19 vaccines against a continued surge in new infections.

“The strains from COVID are hitting medical systems in the Midwest and it is almost certain that mobility is down and will likely remain that through the holiday shopping season,” said Boris Schlossberg, managing director at BK Asset Management, in a note.

“That will be positive for digital retailers but may be the death knell for many small to medium-size brick and mortar stores and will likely create further contractionary ripples in the economy in Q4,” he said.

Markets thus far have been buoyed, however, as drugmakers make rapid progress toward a vaccine, he said.

Pfizer Inc. PFE, -0.35% on Friday said it would file Friday for approval from U.S. regulators for emergency use of the vaccine it’s developed with BioNTech SE BNTX, +4.96% that has proven 95% effective in a clinical trial. Moderna Inc. MRNA, +4.36% earlier this week said its vaccine candidate was more than 94% effective.

Which companies are in focus?
How are other markets faring?

Europe markets

Asian markets

  • In China, the Shanghai Composite Index SHCOMP, +0.43% booked a 0.4% gain, while the CSI 300 000300, +0.31% finished the session 0.3% higher.
  • Japan’s Nikkei 225 NIK, -0.41% ended with a 0.4% loss

Other assets:

  • The yield on the 10-year Treasury note TMUBMUSD10Y, 0.836% fell 2.2 basis points to 0.83%. Yields and prices move in opposite directions.
  • Crude-oil futures CL.1, +0.57% gained 0.6% to trade at $42.17 a barrel.
  • Gold futures GCZ20, +0.22% rose $5.50, or 0.3%, to reach $1,867 an ounce