A trader works on the floor of the New York Stock Exchange (NYSE) on November 8, 2021.
Brendan McDermid | Reuters
US stock futures fell in overnight trading on Thursday as investors braced for a shorter trading day amid renewed Covid fears about a new variant found in South Africa.
Dow Jones Industrial Average futures fell more than 400 points, while the S&P 500 and Nasdaq 100 were in negative territory.
The downward movement in futures came after WHO officials on Thursday warned of a new variant of Covid-19 that was detected in South Africa. The UK temporarily suspended flights from six African countries due to the variance.
Markets were closed on Thursday for Thanksgiving, so stocks are coming off the slight gains on Wednesday that halted losses for the week for the S&P 500 and Nasdaq Composite.
Treasury yields have risen this week, putting pressure on high-growth stocks. The Nasdaq is down 1.3% for the week, while the S&P 500 is up less than 0.1% and the Dow is up about 0.6%.
The last weeks of the year are usually a strong period for the market, and the so-called Santa Claus rally often creates happy holidays for Wall Street. The S&P 500 is up 25% so far this year.
“I think we are probably in a market that will be in its lane for the next few weeks until we get to the next one. [Fed’s Federal Open Market Committee] meeting, “said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.” I think spending will be strong at the consumer level … I think when we look at the November employment report in mid-December, I think it will be favorable. “
“I think the potential for market recalibration, reconsideration or reassessment is more likely to come when the FOMC makes its announcements in [Dec. 15]. Until then, we will have much more than we already know, “Ma added.
Friday also marks the unofficial start of the holiday shopping season, as investors will search for information on Black Friday to determine the mood of the American consumer.
Retail stocks have seen dramatic moves in both directions during this earnings season. On Wednesday, shares in Gap and Nordstrom tumbled more than 20%, but Kohl’s rose more than 10% a week ago after reporting strong growth in sales.
Retail executives spoke during the quarter about how they are handling supply chain issues and inflation. It also remains to be seen whether the discussion of supply chain issues caused consumers to start their holiday shopping early, which could affect fourth-quarter sales.
“I wouldn’t be surprised if it was a dynamic around the holiday season,” said Sarah Henry, portfolio manager at Logan Capital Management. He added that his firm was looking for companies with long-term strategic advantages that would try to bet on the best Christmas sales results.
Wednesday also saw several strong economic reports, with personal income and consumer spending for October higher than expected and initial jobless claims reached their lowest level since 1969. However, the core PCE, the indicator of inflation preferred by the Fed, remained high at 4.1%.
There are no major economic releases scheduled for Friday. The stock market will close at 1pm ET on Friday due to the holiday weekend.