U.S. Stocks Lose Momentum As Virus Worries Come Back Into Spotlight

Attention Shifts From Coronavirus Aid Package To Economic Data

S&P 500 futures were pointing to a higher open following yesterday’s major upside move but started to lose momentum and slipped into the negative territory.

According to U.S. officials, the consensus on the $2 trillion coronavirus aid package has been reached. The vote will take place today. The aid package will include help to businesses and direct payments to U.S. families.

Yesterday’s big move was inspired by optimism regarding the U.S. Federal Reserve unlimited quantitative easing program and the upcoming coronavirus aid package.

Now that the coronavirus aid package is expected to successfully pass the vote today, the market’s attention will turn to the spread of the virus and economic data.

So far, news coming out of Europe is grim. Business morale in Germany hit its lowest level since the global financial crisis, and an economist from the German Ifo institute estimated that the country’s economy can contract by as much as 20%.

In the U.S., traders and investors are eagerly awaiting the release of Initial Jobless Claims, which will be published on Thursday. This number will provide a first view of the blow that virus containment measures dealt on the U.S. businesses.

The Duration Of Virus Containment Measures Is Uncertain

While the U.S. President Donald Trump has signaled that he wanted to reopen the U.S. economy by Easter, it remains to be seen whether such a move will be viable.

Andrew Cuomo, the Governor of the hard-hit New York state, stated that the worst could still be two to three weeks away. In Califorina, Governor Gavin Newsom stated that reopening the economy in April would be sooner than any of the experts he talked to believed possible.

From an economic point of view, there’s a huge difference between containment measures that last two weeks and containment measures that last for a month. This is a key uncertainty right now, and it remains to be seen whether the market is pricing the lockdown risks correctly.

Stocks To Watch

Gold miners will once again be in spotlight as virus containment measures start affecting their production. Agnico Eagle Mines is hit by virus-related measures in Quebec, together with Yamana Gold, Iamgold and other mining companies.

Oil services firms like Schlumberger, Halliburton and Baker Hughes, which showed strong performance yesterday, will likely experience additional volatility as WTI oil prices failed to stay above $24 per barrel and  continue their downside move.