Stock futures fall amid fears of a new Covid variant found in South Africa

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A trader is working on the floor of the New York Stock Exchange (NYSE) on November 8, 2021.

Brendan McDermid | Reuters

US stock futures fell overnight on Thursday as investors prepared for a shortened trading day in the middle of renewed Covid fear of a new variant found in South Africa.

Futures for the Dow Jones Industrial Average fell more than 400 points, while those for the S&P 500 and Nasdaq 100 were both in negative territory.

The downward movement in futures came after WHO officials on Thursday warned of one new Covid-19 variant discovered in South Africa. The The UK has suspended flights from six African countries due to the variant.

The markets closed on Thursday for Thanksgiving, so the shares are coming from small gains on Wednesday that strengthened this week’s losses for the S&P 500 and Nasdaq Composite.

Treasury interest rates have risen this week, which has put pressure on high-growth stocks. Nasdaq is down 1.3% for the week, while the S&P 500 is up less than 0.1% and the Dow has risen about 0.6%.

The last weeks of the year are usually a strong period for the market, where the so-called Santa Claus rally usually creates a pleasant weekend for Wall Street. The S&P 500 has risen by 25% so far this year.

“I think we’ll probably be in a market that is in its infancy in the next few weeks until we get to the next one [Fed’s Federal Open Market Committee] meeting “, says Yung-Yu Ma, investment strategist at BMO Wealth Management.” I think spending will be strong at the consumer level … I think when we see the job report in November coming out in mid-December, I think it will to be beneficial. “

“I believe that the potential for recalibration, reconsideration or revaluation of the market will most likely come when FOMC makes its announcements on [Dec. 15]. Until then, we will have much more of what we already know “, Ma added.

Friday also marks the unofficial start of the holiday shopping season, as investors will look for insights from Black Friday to determine the mood of the American consumer.

Retail stocks have seen dramatic movements in both directions during this trading season. On Wednesday, shares in Gap and Nordstrom fell more than 20%, but Kohls jumped more than 10% one week ago after reporting strong sales growth.

Retail managers spoke during the quarter about how they handle supply chain problems and inflation. It also remains to be seen whether the discussion about problems with the supply chain led consumers to start their holiday shopping early, which potentially reduced sales during the fourth quarter.

“I would not be surprised if there was a dynamic around the holiday season,” says Sarah Henry, a portfolio manager at Logan Capital Management. She added that her company was looking for companies with long-term strategic advantages rather than trying to invest in the best holiday sales results.

Wednesday also saw several strong financial reports, with personal income and consumption spending for October coming in higher than expected and initial unemployment applications which have reached their lowest level since 1969. But Core PCE, the Fed’s preferred inflation meter, remained at 4.1%.

There are no major financial reports planned for Friday. The stock exchange closes at 13.00 ET on Friday due to the holiday weekend.

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