Dow Futures Panic Because 6-Month Lockdowns Risk Stock Market Coma


  • Dow Jones Industrial Common (DJIA) futures swung wildly forward of the Wall Road open Monday.
  • Trump admitted that coronavirus lockdowns should proceed past his optimistic Easter deadline.
  • Well being consultants say it must be even longer, recommending as much as six months of restrictions.

The inventory market appears to be like poised for a nervous open on Monday after final week’s record-breaking reduction rally. Dow Jones Industrial Common (DJIA) futures fell as a lot as 1% within the premarket session.

Buyers are adjusting to the fact that coronavirus lockdowns could lengthen for months. A brand new report on ‘reopening’ America mentioned restrictions shouldn’t be totally lifted till a vaccine is found. And, within the UK, the deputy chief medical officer mentioned lockdown measures may very well be in place for six months.

Two or three months to see whether or not we’ve actually squashed it, with about three to 6 months ideally … however then to see at which level we will truly get again to regular. It’s believable that it may go additional than that.

Six months of restrictions would have a devastating affect on the Dow Jones. Analysts say it is going to successfully put the economic system right into a coma for half a 12 months.

[Coronavirus will] put most economies on life assist — into some form of deep freeze — that they will come out of in three, in all probability extra like six, months.

Dow futures level to nervous inventory market open

Dow futures contracts swung wildly in a single day, however any features have been short-lived because the index appears to be like to open zero.5% decrease.

Dow Jones Industrial Common (DJIA) swung out and in of unfavorable territory in a single day. Supply: Yahoo Finance

S&P 500 futures were up slightly by 0.2% while Nasdaq Composite futures were up 0.3%.

Trump rolls back Easter deadline

The president was forced to abandon his optimistic Easter deadline this weekend. He extended official restrictive measures until at least April 30th and admitted that 100,000 deaths was the best-case scenario.

I wish we could have our old life back… but we’re working very hard, that’s all I know. I see things, I see numbers, they don’t matter to me. What matters to me is that we have a victory over this thing as soon as possible.

But even April 30th is optimistic, according to former FDA Commissioner Scott Gottlieb. He thinks America will be right at the peak of the outbreak at that point.

It’s going to be another three, four weeks until we see the peak in the epidemic curve in regions like New York, and that’s the hopeful case.

Road to re-open America?

In a new report, titled ‘National coronavirus response: A road map to reopening,’ published by American Enterprise Institute, the authors advise that America return to normal only at ‘phase III’ of the pandemic. But that requires a vaccine.

Once a vaccine has been developed, has been tested for safety and efficacy, and receives FDA emergency use authorization, states can move to Phase III.

Partial rollbacks can begin on a state-by-state basis earlier but only after two-straight weeks of declining cases. Author Gottlieb explains:

14 days after you start to see a sustained reduction in the number of daily cases, that’s the point at which you can contemplate lifting some of these measures that we have in place right now, some of these very aggressive social distancing measures. But you need to do it very gradually.

Advisor to the report and Director of John Hopkins Center for Health Security added that lockdowns may return if there’s a second wave of infections.

If monitoring shows the disease is starting to spread again quickly with relaxing of measures, states should be prepared to reestablish large social distancing quickly.

Dow Jones braces for certain recession

All of this brings us back to the economy and the stock market. The Dow Jones may not have priced in a deeper depression as a result of a six month containment period. Wells Fargo now predicts a 15% slump in the economy. Asked if there’s any chance of avoiding recession, the bank’s securities analyst Mark Vitner said:

No. There’s no way that we’re going to not go into recession. We think that we’re probably going to decline at about 15% annual rate … There’s no question the economy’s going to be in a recession.

He added that stimulus measures would “plug a hole” but won’t get the economy “roaring” again. With a raft of economic data on the calendar this week, expect another choppy session.

This article was edited by Samburaj Das.

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