Dow Falls as Virus Fears Grip Europe, Tech Outperforms—and What Else Is Happening in the Stock Market Today

Current Chair Jerome Powell is viewed as likely to be renominated as leader of the Federal Reserve.

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The stock market was falling Friday as investors were gripped by Covid-19 fears amid a new wave of lockdown pressures in Europe, though the technology sector continued to outperform.

Futures for the Dow Jones Industrial Average indicated an open more than 100 points lower, after the index slipped 60 points Thursday to close at 35,870. Futures for the S&P 500 signaled a start almost as low after the index closed at an all-time high Thursday. The technology-heavy Nasdaq was poised to open 0.4% higher and outperform its peers.

Overseas, Hong Kong’s Hang Seng Index fell 1.1%, underperforming other bourses in Asia as it was weighed down by a stark fall in Alibaba (ticker: BABA and 9988.H.K.) stock following the Chinese e-commerce giant’s quarterly results Thursday that showed slowing growth. The pan-European Stoxx 600 was down 0.1%.

U.S. stock market futures and European equities were both firmly higher in early trading before turning lower. 

The tumble came amid renewed fears over the economic impact of Covid-19—a pressure that has faded in recent months—as Austria announced that it would go into a full national lockdown starting Monday. The lockdown could last up to 20 days and came with an announcement that there would be a legal requirement to be vaccinated against the virus that causes Covid-19 by February 2022.

In tandem with a tightening in Austria, Germany announced that it would increase restrictions for unvaccinated people and a government minister said that Europe’s largest economy couldn’t rule out a lockdown.

Worries about Covid-19 hit the travel sector as well as the oil market. Futures for international benchmark Brent crude fell near 2% to around $79.75 a barrel while contracts for U.S. oil—West Texas Intermediate—were trading hands around $77.60.

More broadly, investors seem to be allaying fears around global inflation, after the latest dark cloud was Thursday’s downbeat U.S. jobless claims data. Tech stocks were leading the charge higher, with a few familiar big names— Nvidia (NVDA) Tesla (TSLA), Apple (AAPL), and others—really shining, both on the back of company news and wider sentiment on the sector.

“It should be noted that we are not seeing a lot of real thrust in the market, rather a bit of chopping around the cycle/record highs,” said Neil Wilson, an analyst at broker Markets.com. “Path of least resistance is upwards for the U.S. market with real rates providing only one option in stocks.”

There remain a number of updates to come on the U.S. political front, with the House of Representatives set to vote Friday on President Joe Biden’s $1.75 trillion social spending plan.

“The Congressional Budget Office estimates that the plans will add around 0.16% GDP to the deficit each year on average—markets are unlikely to be surprised about this,” said Paul Donovan, the chief economist at UBS Global Wealth Management. “The redistribution may matter to investors, the deficit figure will not.”

More pressing for markets is the future of the Federal Reserve. Biden said Tuesday that his pick to be the next chair of the central bank would come “in about four days,” which means the clock is ticking as the country heads into the Thanksgiving holiday.

Current Fed Chair Jerome Powell is viewed as the front-runner for renomination, but betting odds have recently begun to favor Fed Governor Lael Brainard—who is viewed as more dovish—as an underdog favorite. Brainard, like Powell, has been interviewed by the White House.

On the economic front, investors are likely to watch comments from Fed Vice-Chair Richard Clarida and Fed Governor Christopher Waller, who speak in the wake of last week’s high consumer-price index (CPI) print, which signaled faster-than-expected inflation.

“After last week’s blowout CPI markets should be sensitive to any change of official tone,” said Padhraic Garvey, the head of research for the Americas at ING bank.

Here are seven stocks on the move Friday

The travel sector took a beating on the back of Covid fears, with the owner of British Airways and other carriers IAG (IAG.U.K.) down 4.5% in London as Lufthansa (LHA.Germany) slipped 3.7% in Frankfurt. InterContinental Hotels Group (IHG.U.K.) fell 2.7% in London.

Alibaba (BABA and 9988.H.K.) tumbled 10.7% in Hong Kong following downbeat results Thursday that saw its U.S.-listed stock drop more than 11%. The U.S. stock was down slightly in the U.S. premarket.

Nvidia (NVDA), which has been on a tear this week—up near 6% over the last five days—was rising again, climbing near 2% in U.S. premarket trading.

Workday (WDAY) was sliding, down 8% in the premarket, despite posting better-than-expected earnings late Thursday.

UWM Holdings (UWMC) shot up more than 20% in the premarket, after the company announced that a secondary offering set to increase its public float by around 50% had been canceled, along with a concurrent share buyback plan.

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