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Renewed Coronavirus Concerns May Continue To Weigh On Wall Street

The major U.S. index futures are currently pointing to a significantly lower opening on Monday, with stocks likely to extend the sharp pullback seen last week.

Concerns about a second wave of coronavirus infections may continue to weigh on the markets after Beijing recorded a spate of new Covid-19 cases in a major wholesale food market.

Data compiled by the New York Times also showed a recent increase in coronavirus cases in more than 20 states, including California, Florida, and Nevada.

Texas and North Carolina also reported a record number of coronavirus-related hospitalizations on Saturday, adding to worries that businesses reopening may drive a second wave.

New York Governor Andrew Cuomo said Sunday the state has received 25,000 complaints about businesses violating reopening guidelines and threatened to take liquor licenses away from bars and restaurants that break the rules.

However, the negative sentiment may be partly offset by a report from the New York Federal Reserve showing manufacturing activity in New York steadied in June after seeing sharp contractions in April and May.

After moving sharply higher early in the session, stocks fluctuated over the course of the trading day on Friday but maintained a largely positive bias. The advance on the day came on the heels of the sell-off seen on Thursday.

The major averages showed some wild swings before finishing the day firmly positive territory. The Dow spiked 477.37 points or 1.9 percent to 25,605.54, the Nasdaq jumped 96.08 points or 1 percent to 9,588.81 and the S&P 500 surged up 39.21 points or 1.3 percent to 3,041.31.

Despite the rebound on the day, the major averages posted steep losses for the week. The Dow and the S&P 500 plunged by 5.6 percent and 4.8 percent, respectively, while the Nasdaq slumped by 2.3 percent.

Bargain hunting contributed to the strength on Wall Street, as traders looked to pick up stocks at relatively reduced levels.

The steep drop on Thursday marked the worst day for the markets since the sell-off seen as worries about the coronavirus began to escalate in March.

Worries about a second wave of coronavirus infections contributed to the sharp losses in the previous session even as Treasury Secretary Steve Mnuchin told CNBC the U.S. "can't shut down the economy again."

The sell-off on Thursday largely offset the gains seen earlier this month, although the major averages remain well off their March lows.

Adding to the positive sentiment, the University of Michigan released a report showing a continued rebound in U.S. consumer sentiment in the month of June.

The preliminary report showed the consumer sentiment index for June climbed to 78.6 from 72.3 in May and 71.8 in April. Economists had expected the index to rise 75.0.

Surveys of Consumers chief economist Richard Curtin said the increase by the index reflected gains in the outlook for personal finances and more favorable prospects for the national economy due to the reopening of the economy.

Meanwhile, a separate report from the Labor Department showed a bigger than expected jump in U.S. import prices in the month of May.

The Labor Department said import prices surged up by 1.0 percent in May after plunging by 2.6 percent in April. Economists had expected import prices to increase by 0.6 percent.

The rebound in import prices came as fuel prices spiked by 20.5 percent in May following the 31.0 percent nosedive in the previous month.

The report also showed a rebound in export prices, which climbed by 0.5 percent in May after tumbling by 3.3 percent in April. Export prices were expected to rise by 0.6 percent.

Oil service stocks moved sharply higher on the day, regaining some ground following the steep drop seen over the past few sessions.

Reflecting the strength in the sector, the Philadelphia Oil Service Index surged up by 5.1 percent. The rebound by oil service stocks came despite a modest decrease by the price of crude oil.

Bargain hunting also contributed to substantial strength among steel stocks, with the NYSE Arca Steel Index jumping by 4.6 percent after falling sharply earlier in the week.

Banking stocks also showed a strong move back to the upside on the day, driving the KBW Bank Index up by 4 percent.

Commercial real estate, housing, and transportation stocks also moved notably higher, regaining ground along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are tumbling $1.36 to $34.90 a barrel after edging down $0.08 to $36.26 a barrel last Friday. Meanwhile, after falling $2.50 to $1,737.30 an ounce in the previous session, gold futures are plunging $26.90 to $1,710.40 an ounce.

On the currency front, the U.S. dollar is trading at 107.40 yen versus the 107.38 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1249 compared to Friday's $1.1256.

Asia

Asian stocks fell sharply on Monday after Beijing recorded a spate of new Covid-19 cases in a major wholesale food market, raising worries about a second wave of coronavirus infections. Weaker than expected retail and industrial production data from China also dented sentiment.

Chinese shares fell as the country reported 49 new coronavirus cases. Out of these, 39 were reported in the capital Beijing and three cases found in neighboring Hebei province, the National Health Commission said.

Additionally, economic data for May missed expectations, adding to growth worries. The benchmark Shanghai Composite Index slumped 29.71 points, or 1 percent, to 2,890.03, while Hong Kong's Hang Seng Index plunged 524.43 points, or 2.2 percent, to 23,776.95.

Chinese industrial production grew 4.4 percent on a yearly basis in May, faster than the 3.9 percent increase logged in April, data from the National Bureau of Statistics showed. Economists had forecast a 5 percent rise.

Retail sales dropped at a slower pace of 2.8 percent in May from last year, slower than the 7.5 percent decrease seen in April. Sales were forecast to fall 2 percent.

During January to May, fixed asset investment decreased 6.3 percent from the same period of last year, while economists had forecast a 5.9 percent drop.

The People's Bank of China today injected 200 billion yuan into the financial system via a medium-term lending facility at a rate of 2.95 percent, unchanged from a previous operation.

Japanese shares tumbled to close near three-week lows as investors fretted about a second wave of coronavirus infections and weaker than expected factory data from China suggested the economic recovery remained fragile.

The Nikkei 225 Index plummeted 774.53 points, or 3.5 percent, to 21,530.95, its lowest close since May 27. The broader Topix closed 2.5 percent lower at 1,530.78, with airlines, shipping companies and semiconductor-related firms pacing the decliners. Sapporo Holdings lost 5.8 percent after Nomura cut its rating on the beverage firm.

Australian markets hit a three-week low as new figures from the Australian Bureau of Statistics showed the country recorded its largest-ever decrease in overseas travel in April. A survey also found that the impact of the pandemic on the economy remains the biggest worry for people, aside from health.

The benchmark S&P/ASX 200 Index dove 128.00 points, or 2.2 percent, 5,719.80, its lowest close since May 25 after the government said it would run record budget deficits this year and next following spending on a big stimulus and infrastructure to aid its economic recovery.

The broader All Ordinaries index closed 2.2 percent lower at 5,830, with banks, mining, healthcare and energy companies bearing the brunt of the selling.

Meanwhile, Healius shares jumped 19 percent after the company announced the sale of its primary care business. Building materials maker Boral also gained 1.7 percent after it got a new chief executive.

Seoul stocks plunged due to worries about a resurgence in Covid-19 cases across the world. The benchmark Kospi plummeted 101.48 points, or 4.8 percent, to 2,030.82 as reports of a new Covid-19 lockdown in Beijing sparked fears that the measures taken to contain the virus so far are not enough. That marked its sharpest fall since March 23.

Europe

European stocks have moved lower on Monday after China as well as the U.S. states of Texas and North Carolina reported rising coronavirus infections during the weekend. Weak factory activity and retail sales data from China also added to investor concerns about the global economy.

While the U.K.'s FTSE 100 Index has slumped by 1 percent, the German DAX Index and the French CAC 40 Index are down by 0.8 percent and 0.7 percent, respectively.

BP Plc shares have tumbled after the energy giant announced it would make shuddering write-offs of $13 billion to $17.5 billion.

Miners have also lost ground after the release of the weak Chinese data. Anglo American, Antofagasta and Glencore are posting notable losses. Leisure and travel-related stocks have also plunged.

Fashion retailer H&M has also come under pressure after its fiscal second quarter sales slumped 50 percent.

Consumer goods giant Unilever has also declined. The company said it would invest 1 billion euros in a new Climate & Nature Fund, and will achieve net zero emissions from all its products by 2039, more than a decade ahead of the 2050 Paris Agreement.

Meanwhile, Swiss sensor maker Sensirion has soared after raising its 2020 outlook and confirming mid-term growth prospects.

British drug major AstraZeneca has also risen. The company has signed a contract with Europe's Inclusive Vaccines Alliance to supply up to 400 million doses of the University of Oxford's Covid-19 vaccine.

In economic news, the euro area trade surplus reached its lowest since late 2011 as both exports and imports logged the biggest contraction on record in April amid the coronavirus pandemic, data from Eurostat showed.

The trade surplus plunged to a seasonally adjusted 1.2 billion euros in April from 25.5 billion euros in March. This was the lowest since October 2011. Exports and imports decreased by a record 24.5 percent and 13 percent, respectively in April.

On a yearly basis, exports were down 29.3 percent and imports decreased 24.8 percent in April. The unadjusted trade surplus was 2.9 billion euros versus 15.5 billion euros in the same period last year.

U.S. Economic Reports

Manufacturing activity in New York steadied in the month of June after seeing sharp contractions in April and May, according to a report released by the Federal Reserve Bank of New York on Monday.

The New York Fed said its general business conditions index spiked to negative 0.2 in June from negative 48.5 in May. A negative reading indicates a contraction in regional manufacturing activity.

The jump by the index far exceeded the estimates of economists, who had expected the index to surge up to negative 27.5.

At 11 am ET, Dallas Federal Reserve President Robert Kaplan is scheduled to speak to the Money Marketeers of New York in a webinar entitled "The Economic Impact of Covid-19 and How the Country Will Move Forward."

Stocks In Focus

Shares of Moderna (MRNA) are moving notably higher in pre-market trading after a report from Israeli news site YNET said Israel is in advanced talks to buy the biotech company's coronavirus vaccine.

Insurance seller SelectQuote (SLCT) may also see initial strength after Credit Suisse initiated coverage of the company's stock with an Outperform rating.

On the other hand, Norwegian Cruise Line (NCLH), Royal Caribbean (RCL) and Carnival (CCL) are seeing significant pre-market weakness amid concerns about a second wave of coronavirus infections.

Shares of Pilgrim's Pride (PPC) may also move to the downside after the poultry producer announced president and CEO Jayson Penn is taking a paid leave of absence after being indicted in an alleged price-fixing scheme.

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