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U.S. Stock Futures Crash Again, Viral Threat Growing, Stimulus Uncertainty Raises Fear

Stock Futures Fall In Early Trading

The U.S. stock futures are down again in early trading. The spreading coronavirus has severely damaged economic stability and traders are looking for the government to step in. On Tuesday, President Donald Trump floated the idea of a 0% employment tax through the end of the year, raising the market’s hopes. His staff caused confusion stating no decision had been made and uncertainty about what might be done was still present.

The number of cases of coronavirus continues to spread worldwide. The last WHO report has the number of cases at over 113,000 globally but that number is sure to have changed in the last 24 hours. The U.S. counts more than 1,000 cases with reported outbreaks in more states.

Italy and the UK both got a shot in the arm from their governments but the news was bitter medicine. Italy says it will increase spending to aid the economy while hinting at new travel restrictions. In the UK, the BOE slashed rates by 50 basis points in an emergency move that has GBP backed trading pairs on the move. The FOMC meets next week and is expected to deliver another 50 to 75 basis point cut to its benchmark rate.

Economic Data Is Strong

The economic data remains strong. Today’s news includes mortgage data and the Consumer Price Index. On the housing front, the number of refinancing request jumped 79% from the previous as interest rates hit record lows. The average homeowner is expected to save thousands over the life of their loans and that savings should support consumer spending.

The CPI came in at 0.1% month to month and 2.3% up from last year, both reads slightly better than expected. At the core level, ex-food and energy, CPI rose 0.2% and 2.5% making the 24th month of gains greater than 2.0%.

Stocks On The Move

Travel related stocks are among today’s hardest hit. The travel and leisure complex is taking a big hit. Mounting travel restrictions that have them cutting back on flights and occupancy outlook. Air carriers American, Delta, and Jetblue are all down about -2.0% in early trading. Cruise ships Norwegian Cruise Lines and Carnival are down -4.5% and 7.0%. Carnival is down the most because of its international presence and high exposure to the virus.

Oil is down again in early trading and having an impact on the energy complex. WTI is down about -4.5% following Tuesday’s rebound and indicates more downside is likely. The yield on the Ten Year Treasury, an indication of market fear, is still trading below 1.0%. It is likely to remain there until this threat has passed.