Editorial StaffU.S. stock index futures were pointed to a rebound for Wall Street on Tuesday, on the heels of a sharp selloff, with optimism aided by the Biden administration’s plan to fight rising COVID-19 cases driven by the omicron variant.
Investors also were encouraged by news Monday that the Senate will vote on President Biden’s Build Back Better economic plan in January despite Democratic Sen. Joe Manchin’s opposition to it suggesting further negotiations with the West Virginia Senator are likely.
How are stock-index futures trading?
- S&P 500 futures ES00, 0.86% rose 1% to 4,602
- Dow Jones Industrial Average futures YM00, 0.78% gained 321 points, or 1% ,to 35,132
- Nasdaq-100 futures NQ00, 1.09% climbed 1% to 15,789
On Monday, the S&P 500 SPX, -1.14% fell 1.1% to 4,568.02, the largest one-day point and percentage decline since Dec. 1, based on Dow Jones Market Data. The Dow Jones Industrial Average DJIA, -1.23% closed 433.28 points, or 1.2%, lower at 34,932.16, its weakest since Dec. 3. The Nasdaq Composite Index COMP, -1.24% dropped 1.2% to 14,980.94, the lowest since Oct. 15.
What’s driving the market?
Monday’s volatile action saw the S&P 500 index post its biggest three-day percentage slide since Sept. 30 and the Nasdaq’s worst such drop since May 12. Markets were hit first by fears about the economic impact of rising COVID-19 cases from the omicron variant.
Investors are trying to gauge just how much the new omicron variant of coronavirus will slow economic growth, just as central banks are reining in their pandemic aid.
The Biden administration is due to announce a omicron-fighting plan on Tuesday, with distribution of 500 million free at-home COVID-19 testing kits, the deployment of federal emergency assistance teams to six hard-hit states and other measures, according to a report in The Wall Street Journal.
“We see stocks rebounding from an over reaction to the variant news and Biden’s new plan to distribute free Covid tests beginning in January,” said Peter Cardillo, chief market strategist at Spartan Capital, in a note to clients.
Another blow Monday came after Sen. Joe Manchin (D-W.Va.) said he couldn’t support Biden’s$2 trillion spending plan. “That’s $2 trillion that won’t hit the market so soon and help companies boost business at a time when the Federal Reserve (Fed) will be throwing less money onto the financial markets,” said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note to clients.
Also helping Tuesday’s mood was a Bloomberg report that Manchin and Biden spoke on Sunday evening, as a Washington source said that chat likely left the door open to further negotiations.
“With the rising volatility, we could see Santa taking back the reins from Manchin for the next couple of sessions. Low trading volumes could help exacerbate any rebound,” said Ozkardeskaya.
Traders are also checking out early for the holidays, leaving less liquidity and exaggerating some market moves, creating a hurdle for those trying to navigate a shortened week of trading. U.S. markets will close on Friday, Christmas Eve.
The only U.S. data on tap for Tuesday are the third-quarter current-account deficit.
