US pre-open: Futures point to sharp losses amid fears of second wave
Wall Street futures had stocks opening sharply lower on Thursday amid an increased number of new Covid-19 cases in US states that have reopened from lockdowns.
As of 1225 BST, Dow futures were down 2.29%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.90% and 1.50% lower, respectively.
The Dow closed 282.31 points weaker on Wednesday after the Federal Open Market Committee said it expects the US economy to shrink by 6.5% this year, leading it to keep interest rates close to zero into 2022. However, the Fed anticipates that the US economy will return to growth in 2021, with unemployment falling to 9.3% and GDP increasing 5%.
"The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," it said on Wednesday.
Treasury Secretary Steven Mnuchin also said on Wednesday that he would seriously consider more direct payments to US citizens in the next phase of the White House's Covid-19 rescue package, stating that funds should also be targeted to help sectors struggling to reopen - including hospitality and tourism.
IG analyst Chris Beauchamp said: "Stock markets remain deep in the red, and a cursory glance at market reaction to last night’s Fed would suggest that Powell was a major disappointment for investors."
Concerns regarding a second wave of Covid-19 cases were also weighing heavily on sentiment after Texas, one of the first states to exit lockdowns, reported three straight days of record-breaking coronavirus hospitalisations.
Nine of California's 58 counties have also reported a spike in new confirmed cases and the overall number of cases in the US has now topped two million.
Also in focus on Thursday will be this week's jobless claims data at 1330 BST.
On the corporate side of things, shares in United Airlines, Delta, American, Southwest, Carnival and Norwegian Cruise Line were all down more than 7% ahead of the open as a result of the increased number of new Covid-19 hospitalisations.
Oil prices were also under pressure before the bell, with West Texas Intermediate futures down 3.94% at $38.04 per barrel and Brent Crude futures 3.33% weaker at $40.34 a barrel.