Dow Futures Slide As 'Vaccine Trade' Rally Pauses Amid Record Infection Surge: Weekly Jobless Claims Fall to 709,000

With U.S. coronavirus infections rising at a record pace, and cases surging in Europe, bets on a near-term vaccine breakthrough have given way to concern for the economic and human damage wrought by the pandemic's third wave.

The Thursday Market Minute

  • Global stocks mixed as record COVID infections in Europe and the U.S. pause 'vaccine trade' rally heading into Thursday's opening bell.
  • U.S. infections rise at a record daily pace of 144,000, while France overtakes Russia as the new European hotspot amid a renewed resurgence for the deadly virus.
  • Moderna's mRNA vaccine could see similar efficacy to Pfizer's, late-stage data reportedly indicates, with a full study expected to be released in the coming days.
  • Wall Street is looking at a mixed open Thursday ahead of weekly jobless claims and inflation data at 8:30 am Eastern time.

U.S. equity futures slipped lower Thursday, although tech stocks held onto meager gains in overnight trading, as the global 'vaccine trade' rally paused amid a renewed surge in coronavirus infection rates and questions over the timing of any treatment rollout. 

Weekly jobless claims fell to 706,000 over the week ending November 7, the lowest levels since March and down from an upwardly revised total of 757,000 for the prior period.

The slide takes the four-week average of Americans filing for new unemployment benefits to just over 755,000. 

Record infection rates in France, which have vaulted Europe's second-largest economy into the ignominious position as the region's coronavirus hot-spot, as well as ongoing surges in Germany, Italy and Britain continue to underscore both the breadth of the pandemic's effect and its potential to strangle economic growth prospects.

In the U.S., cases have been rising at a rate of more than 100,000 per day for more than a week, hospitalizations are at record highs and cities such as New York are issuing fresh restrictions on businesses and contemplating the closure of public schools. The seven-day average of fatalities linked to the virus is also on the rise and passed the 1,000 marks following yesterday's surge.

The pandemic's resurgence, in fact, continues to undermine the strength of Wall Street's recent rally, which has taken key benchmarks close to all-time highs despite a lack of financial support from the current lame-duck Congress and the likelihood of several months needed to test, approve, produce and distribute any workable vaccine to the 50% to 60% of the U.S. population needed in order to achieve so-called herd immunity. 

That timeline could be truncated if multiple vaccine candidates are ultimately green-lit by health authorities, however, and Moderna Inc.'s  (MRNA) - Get Report candidate is said to have produced similar results to Pfizer Inc.  (PFE) - Get Report in late-stage trials that could be published in the next few days.

U.S. equity futures look set to take a breather from the vaccine trade Thursday, however, and the ongoing rotation from tech stocks to value plays in a post-pandemic economy, with futures contracts tied to the Dow Jones Industrial Average priced for a 240 point pullback and those linked to the S&P 500 indicating a 15 point retreat.

Nasdaq Composite futures, meanwhile, suggest a modest 20 point gain for the tech-focused benchmark, which has been hammered this week as investors dump winning tech holdings in the hopes of finding bargains in beaten-down travel, leisure, banking and insurance stocks. 

European stocks were weaker at the open, as well, as markets retreated from a February high following renewed spikes of infections in France and Italy and data from the United Kingdom that showed the economy slowed notably in September, suggesting its November lockdown orders will cause even more damage over the final weeks of the year.

The Stoxx 600 was marked 0.7% lower in the opening hours of trading in Frankfurt, while Britain's FTSE 100 fell 0.7% in London.

Oil prices were little changed in overnight trading following a report from the International Energy Agency that poured cold water on any hopes of a demand spike in energy markets next year, which was set against market speculation that OPEC members are likely to pull plans to increase production by the cartel at the start of the new year.

WTI crude futures contracts for December delivery, the U.S. benchmark, traded 29 cents lower from their Wednesday close in New York and were changing hands at $41.16 per barrel in early European dealing, while Brent contracts for January delivery, the global benchmarked, edged 27 cents higher to $43.53 per barrel.

Overnight in Asia, Japan's Nikkei 225 continued to power into fresh 29-year highs with a 0.68% gain that pegged the benchmark at 25,520.88 points, while the region-wide MSCI ex-Japan index edged 0.16% higher heading into the final hours of trading.