Stock futures dropped overnight on Monday as investors struggled with civil unrest around the country as states try to reopen the economy from the coronavirus pandemic.
Futures at the Dow Jones Industrial Average traded 100 points lower. The S&P 500 futures fell by 0.3%, while the Nasdaq 100 futures fell by about 0.2%.
In a last-minute address from the White House Monday night, President Donald Trump said he will deploy the military if states and cities failed to stop the demonstrations. Futures fell when Trump spoke.
“I mobilize all federal and local resources, civil and military, to protect the laws that follow Americans,”
The stock market has largely ignored the unrest until now, but that could change if investors believe the protests would continue during the summer, disrupting states’ plans to reopen and damage consumer confidence.
“Good news about vaccines helped stocks in May, but US-China relations and civil unrest could steal the limelight in June,” said Lori Calvasina, RBC’s head of US equity strategists, in a note. “The S&P 500 remains very news-driven.”
New York Governor Andrew Cuomo announced that New York City will be on exit Monday night starting at 11 a.m. and will last until 11 p.m. 5 Tuesday to curb protests. Similar exit procedures were introduced in cities across the country in an effort to dissolve mass gatherings.
The market rose slightly on the first day of June after monthly gains. Dow rose 90 points on Monday following a 4.2% gain in May and an 11% rally in April. At the same time, the S&P 500 climbed about 0.3% after winning 4.5% in May and 12.6% the month before.
Investors continued to focus on progress in economic reopening, by offering shares by airlines, retailers and cruise ship operators. However, many on Wall Street became concerned that rising risks of racial strife and tensions in the US-China could reverse the market’s huge comeback.
Tensions with China continued to decline as the country asked state-owned companies to stop buying soybeans and pork from the United States, Reuters reported Monday. The move came after Trump said he would take steps to revoke Hong Kong’s favored trade status, in response to a controversial new security law passed by China’s parliament.
“The link between equities and the economy created a great deal of concern among some investors,” Jeff Buchbinder, stock strategist for LPL Financial, said in a note. “At the same time, resumption optimism and massive stimulation overshadowed some concerns over a second wave of COVID-19 infections and rising tensions between the United States and China.”
As of Monday, the S&P 500 has bounced about 39% of its low in March, sitting about 10% during its record high set in February.
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