Equities Up In Early Trading
The U.S. futures are indicating a solidly higher open on Wednesday. The move is driven by the Super Tuesday primary results that put Joe Biden back in the lead for Democratic Nominee. Today’s market action is firm evidence that Bernie Sander’s socialist agenda is not what investors want. Biden now leads the delegate count 453 to Sanders 373. The Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 are all up about 2.0% in premarket action.
Equity markets are also buoyed by yesterday’s surprise rate cut from the FOMC. The FOMC cut rates by 50 basis point in an emergency statement, the first since the Global Financial Crisis. The vote was unanimous, the statement from Jerome Powell cited a preemptive attempt to combat the economic effects of the coronavirus. Powell also says the U.S. fundamental outlook remains strong and that he expects a quick bounce-back once the virus is passed. Later today, traders will be on the lookout for the Fed’s Beige Book. The Beige Book is a summary of conditions across the 12 Federal reserve regions.
The Virus Is Still Spreading
New cases within China are dwindling but still rising. The epicenter of the outbreak reports 2981 dead so far. The full impact of the virus on China is only now becoming apparent. Earlier in the week, manufacturing PMI showed a deep contraction in both the large-cap and small-cap economies. Today’s news includes a read on small-cap services and it too contracted deeply. The Caixin PMI came in at a record low of 26.5.
Globally, there are more than 93,000 cases and over 3100 dead. South Korea remains the most heavily affected outside of China with 5380 cases but Italy and Iran are both struggling too. Poland is the latest to report a first case showing containment efforts are not working. Germany, Italy, and Iran all report a rising number of infected as well.
Italy has closed all of its schools in an attempt to slow the spread. In Iran, the number of infected topped 3,000 with nearly 100 dead. Iran canceled public prayer in the largest cities in its work to contain the spread. In the U.S., new centers of the outbreak are popping up along the east and west coasts.
Economic Data Still Solid In The U.S.
Today’s economic calendar includes the ADP report on labor. The report showed a larger than expected increase in new jobs for February as job gains occurred across all business sizes. The previous month was revised lower to just over 200,000 but changes to the modeling process make the comp irrelevant. Bottom line? The U.S. labor market is still healthy.