Stock futures were mixed early Friday as concerns over a resurgence of Covid-19 weighed on global markets.
Futures on the Dow Jones Industrial Average fell 138 points, reversing course having earlier been in positive territory by a similar margin. S&P 500 futures were marginally lower while Nasdaq 100 futures gained 60 points.
Risk assets were roiled after Austria announced on Friday morning that it would re-enter a full national lockdown due to a resurgence of Covid-19. Germany on Thursday announced more restrictions for unvaccinated people as a fourth wave sent daily cases to a record high.
The market rally appeared to have slowed down a bit near record levels even amid strong corporate earnings. Macy’s and Kohl’s both blew past analyst estimates in their quarterly earnings reports on Thursday.
So far this week, the blue chip Dow is down 0.6%, on pace for its second negative week in a row. The S&P 500 and the tech-heavy Nasdaq Composite are headed for modest gains, up 0.5% and 0.8% this week, respectively. The S&P 500 is on track for it sixth positive week in seven, sitting 0.3% below its all-time high.
More than 90% of the S&P 500 companies have handed in their financial results for the third quarter, and over 80% of them reported earnings better than Street’s expectations, according to Refinitiv. S&P 500 companies are on track to grow profit by 41.5% year over year.
“Better than expected earnings has been the name of the game this week for the market,” Mike Loewengart, managing director of investment strategy at E-Trade Financial. “While investors may have entered earnings season with some trepidation, there are some clear signs that consumers are resilient and corporate balance sheets are strong despite pricing pressures.”
On Thursday, investors digested U.S. jobless claims data that more or less matched expectations. Initial filings for unemployment insurance fell slightly to 268,000 for the week ending Nov. 13, the lowest level since March 2020, and the seventh straight weekly decline. Economists polled by Dow Jones expected them to have fallen to 260,000.
“With jobless claims hovering around pre-pandemic lows, the question now is will the momentum continue– both in terms of our economic recovery and market trajectory,” Loewengart said.
Investors are also keeping an eye on President Joe Biden’s pick for the next Federal Reserve chair, which is expected to unveil by the weekend. Many expect an even more dovish Fed if Lael Brainard is named the central bank chief, meaning it would take longer to raise interest rates or tighten policy than under Jerome Powell.
In Washington, the House is trying to approve the $1.75 trillion Build Back Better economic package this week. The Senate then plans to take up the legislation after it returns from a Thanksgiving recess.
