Stock futures opened higher Sunday evening as investors mostly shrugged off a relentless climb in coronavirus cases in some regions in the US, and looked ahead to the start of corporate earnings season.
Over the weekend, some states again reported surging numbers of new coronavirus cases, as parts of the country struggled to keep new infections at bay. Florida reported a record 15,300 new Covid-19 cases as of Sunday, the highest one-day total for any US state so far during the pandemic, while new deaths in Florida fell by more than half versus the prior day to 45.
Despite the ongoing surge in the state, Disney’s (DIS) Walt Disney World Resort began reopening in Florida on Saturday to join competitors including Comcast’s (CMCSA) Universal Studios and SeaWorld Entertainment in opening their park gates to customers in the state.
Elsewhere, new deaths in Arizona increased for a third straight day, with 86 reported as of Sunday. The state’s new case count of 2,537 marked a step down from the 3,038 from the day prior. California’s 8,460 new cases were below the state’s average one-day increase over the past seven days.
“The economic implications of the second wave are pretty clear, qualitatively at least. The third quarter recovery will be slower than we previous expected, but we’re hoping that some of the deferred spending will be pushed into the fourth quarter rather than abandoned altogether,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note.
“Markets are caught in the middle. We have argued for months that a full recovery depends on three pillars, namely, sustained progress against the virus, the continuance of super-accommodative Fed policy, and consistent support from fiscal policy,” he added. “Clearly, the first pillar has crumbled, and the third is now in limbo, with the Senate in recess until July 20. The Fed can’t do everything, so we’re not surprised that the S&P 500 has been range-bound since late May.”
As for other potential market catalysts, second-quarter earnings season kicks off this week with a packed docket of big bank earnings, along with other early reporters including Netflix (NFLX), UnitedHealth Group (UNH) and Delta Airlines (DAL). Financials, which have lagged for the year to date, outperformed on Friday heading into earnings season, with the KBW Bank Index (KBW) rising by the most in five weeks at the end of last week.
Market participants have so far set a low bar for second-quarter earnings results across sectors, with the coronavirus pandemic and measures taken to contain it at their most widespread in the April through June period this year. The estimated earnings decline for the S&P 500 is 43.8% for the second quarter, according to data from FactSet as of early July. Such a result would represent the largest year-over-year decline in earnings since the fourth quarter of 2008, and a steep downward revision from the estimate as of March 31, which had been for a decline of 13.6%.
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Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:02 p.m. ET:
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S&P 500 futures (ES=F): 3,189.75, up 11.25 points or 0.35%
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Dow futures (YM=F): 26,081.00, up 104 points, or 0.4%
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Nasdaq futures (NQ=F): 10,857.25, up 20 points, or 0.18%
Guests wearing masks walk to the entrance of Walt Disney World’s Magic Kingdom in Orlando, Florida, on Saturday, July 11, 2020. The theme park reopened at limited capacity during the Coronavirus pandemic. (Stephen M. Dowell/Orlando Sentinel/Tribune News Service via Getty Images)
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