By Peter Nurse
Investing.com – U.S. stocks are set to open lower Monday, as investors look to pocket some of the recent gains amid protests over the timing of economic reopening in a number of states.
Sentiment is also suffering from volatility in the oil market, where the price of the front-month contract for U.S. crude fell to its lowest since 1999 against a backdrop of dwindling storage capacity.
The cash markets have seen strong gains over the last two weeks, pushing the Dow Jones Industrial Average and the S&P 500 to their highest levels since March 10 and the Nasdaq since March 5. In fact, both the Dow and the S&P are on target to record their strongest months since January 1987 and the Nasdaq since April 2009.
The U.S. has recorded over 750,000 Covid-19 cases and some 42,000 deaths, by far the most in the world, but signs have emerged that it is reaching the apex of the outbreak and that infection rates are slowing in some states.
Texas and Vermont have decided to allow certain businesses to reopen on Monday, while South Carolina has reopened public beaches, and there have been protests in a number of states across the U.S. demanding that governors reopen economies shut by the coronavirus pandemic. This is happening despite the risk of a Covid-19 resurgence posed by reopening too soon.
“The focus is now on ending the lockdown and the risk of new waves of infections,” said analyst Thomas Harr at Danske Bank, in a research note, “Research shows that when interventions, such as strict social distancing of the entire population and the closure of schools are relaxed, infections begin to rise again.”
The earnings season gathers pace this week, but is relatively quiet Monday. Instead the focus could be on department store Neiman Marcus after Reuters reported that it is preparing to seek bankruptcy protection as soon as this week.
On the flip side, Shake Shack (NYSE:SHAK) said Monday it will return the $10 million loan it received from the U.S. government after raising about $150 million in an equity offering. Critics had argued that the company’s alternative options for raising finance meant it shouldn’t have tapped a facility that was intended for more constrained companies.
Meanwhile, the oil market has continued to see strong selling Monday, falling to new 21-year lows, as producers and traders struggle to find places to store the excess supply.
At 7:15 AM ET, the June U.S. crude futures contract, where most open interest and volume is concentrated, traded 8.8% lower at $22.82 a barrel, while the international benchmark Brent contract fell 3.5% to $27.11. The May contract, which expires on Tuesday, was languishing at $13.34 a barrel.
Stocks – U.S. Futures Slump Amid Protests Over Reopening
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