US stocks open lower as virus surge overrides vaccine hope

US stocks opened lower on Friday as virus restrictions, a lack of federal fiscal stimulus and expiration of COVID-19 safety nets raise concerns for US economic recovery.

Wall Street's main indexes opened lower on Friday as rising infections overshadow positive vaccine news [File: Shannon Stapleton/Reuters]
Wall Street's main indexes opened lower on Friday as rising infections overshadow positive vaccine news [File: Shannon Stapleton/Reuters]

Wall Street’s main stock indexes opened lower on Friday, putting them on track to cap off another week of highs and lows as vaccine optimism is overshadowed by surging COVID-19 infections and the return of business sapping restrictions and shutdowns.

The Dow Jones Industrial Average was down 53 points, or 0.18 percent, at 29,430.23 within minutes of the opening bell on Wall Street.

The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – and the Nasdaq Composite Index opened lower near the flatline.

The Dow and the S&P 500 closed at all-time highs on Monday after biotech firm Moderna said preliminary trial results showed its COVID-19 vaccine to be 94.5 percent effective.

On Friday, Pfizer and Germany’s BioNTech became the first companies in the vaccine race to submit an application with the US Food and Drug Administration for Emergency Use Authorization of its COVID-19 vaccine. The companies said earlier in the week that late-stage trial data showed their vaccine candidate to be 95 percent effective.

Shares of Pfizer were up 1.63 percent.

But even if the approval is granted, the initial supply of shots will be limited and it will be months before the vaccine is widely available.

Meanwhile, the economy continues to suffer damage that could take years to mend.

Local and state governments across the US are announcing fresh restrictions as COVID-19 infections surge. This week, California introduced curfews while New York closed all public city schools indefinitely with the mayor indicating that gyms and indoor dining could be next.

As businesses are forced to shut their doors and layoff workers, Washington continues to remain at loggerheads over a new round of virus relief aid.

US Senate Democratic leader Chuck Schumer and Republican Majority Leader Mitch McConnell on Thursday said they would resume talks on a stimulus package. Wall Street analysts though are betting a new round of stimulus will not be passed before the end of the year, and that it will likely be a slimmed down package worth $1 trillion.

US Treasury Secretary Steven Mnuchin on Thursday pulled the plug on vital aid, saying the Federal Reserve’s lending programmes that have helped businesses and local governments during coronavirus hardship would expire at the end of the year.

In a note to the US Federal Reserve Chairman Jerome Powell, Mnuchin said $455bn allocated to Treasury under the Coronavirus Aid, Relief, and Economic Security Act also known as the CARES Act should instead be made available for Congress to redistribute.

The Fed chief shot back in a statement on Friday morning: “The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backdrop for our still-strained and vulnerable economy.”

Analysts also say the Fed’s emergency loan programmes have been essential in safeguarding against financial market volatility.

“With the Covid-19 crisis worsening and activity slowing in the absence of fiscal aid, the decision to curtail the Fed’s firepower could unsettle markets and exacerbate economic stress,” Gregory Daco, Chief US Economist at Oxford Economics, wrote in a Friday note.

Other pandemic programmes that have helped millions of Americans make ends meet and stay in their homes are set to expire by year’s end as well.

Meanwhile, the economic bounce back during the summer months in the US continues to show signs of slowing down.

Initial claims for state jobless benefits unexpectedly increased by 31,000 last week to 742,000, the US Bureau of Labor Statistics said on Thursday.

People wait in line as the Los Angeles Regional Food Bank distributes food outside a church amid the outbreak of the coronavirus in Los Angeles, California [File: Mike Blake/Reuters]
Some stocks to watch on Friday:

Shares of Foot Locker Inc were down 1.13 percent after trending higher during the premarket trade. The athletic footwear retailer reported earnings and same-store sales before the bell that blew past analysts’ estimates.

Shares of department retailer chain Ross Stores Inc gained 0.48 percent after its quarterly sales exceeded forecasts.

Source : Al Jazeera

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