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Renewed Coronavirus Concerns May Lead To Continued Weakness On Wall Street

The major U.S. index futures are currently pointing to a lower opening on Thursday, with stocks likely to see further downside following the sell-off seen in the previous session.

Renewed concerns about a spike in coronavirus cases may continue to weigh on the markets after California, Texas and Florida all reported their biggest single-day increases in cases.

According to a tally by NBC News, the U.S. saw a record 45,557 reported Wednesday, surpassing the peak seen during the first wave of the coronavirus on April 26th.

The renewed surge in coronavirus cases in Southern and Western states has partly offset investor optimism about a quick economic recovery, which has helped prop up the markets in recent weeks.

Traders may be worried about the possibility of states reimposing restrictions on businesses, although the Trump administration has ruled out another lockdown.

Adding to the negative sentiment, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 20th.

Stocks moved sharply lower over the course of the trading day on Wednesday, more than offsetting the upward move seen over the two previous sessions. The tech-heavy Nasdaq pulled back well off Tuesday's record closing high.

The major averages climbed off their worst levels of the day but still posted steep losses. The Dow plummeted 710.16 points or 2.7 percent to 25,445.94, the Nasdaq tumbled 222.20 points or 2.2 percent to 9,909.17 and the S&P 500 plunged 80.96 points or 2.6 percent to 3,050.33.

The sell-off on Wall Street came as it seemed traders could no longer ignore the spiking number of new coronavirus cases in several U.S. states.

Fueling the renewed concerns, Florida and California both reported their single biggest daily increases in new cases of COVID-19.

Florida's Department of Health confirmed 5,508 new cases on Tuesday, while the California Department of Public Health reported an additional 7,149 cases.

New York Governor Andrew Cuomo also announced that out-of-state visitors coming to New York, New Jersey and Connecticut from regions with high COVID-19 rates will be required to quarantine for 14 days.

A CNBC analysis of data compiled by Johns Hopkins University found the nation's seven-day average of daily new Covid-19 cases spiked more than 30 percent compared with a week ago.

During congressional testimony on Tuesday, White House health advisor Dr. Anthony Fauci warned of a "disturbing surge" in coronavirus infections.

President Donald Trump has repeatedly blamed the jump in coronavirus cases on increased testing and doubled-down on his suggestion that testing should be slowed.

With the exception of the sharp pullback seen earlier this month, traders have largely shrugged off the concerns about the increase in coronavirus cases amid continued optimism about a quick economic recovery.

Airline stocks saw substantial weakness amid concerns about the impact of the new quarantine requirements in New York, New Jersey and Connecticut, with the NYSE Arca Airline Index crashing by 7.7 percent.

Substantial weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil.

Reflecting the weakness in the sector, the Philadelphia Oil Service Index plummeted by 7.9 percent, the NYSE Arca Oil Index dove by 5.8 percent and the NYSE Arca Natural Gas Index tumbled by 4.9 percent.

Banking stocks also showed a significant move to the downside over the course of the session, dragging the KBW Bank Index down by 4.8 percent.

Steel, brokerage, chemical and networking stocks also saw considerable weakness on the day, reflecting a broad-based sell-off on Wall Street.

Commodity, Currency Markets

Crude oil futures are sliding $0.86 to $37.15 a barrel after plunging $2.36 to $38.01 a barrel on Wednesday. Meanwhile, after falling $6.90 to $1,775.10 an ounce in the previous session, gold futures are declining $6.90 to $1,768.20 an ounce.

On the currency front, the U.S. dollar is trading at 107.37 yen versus the 107.04 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1204 compared to yesterday's $1.1251.

Asia

Asian stocks fell on Thursday amid concerns that a spike in new coronavirus cases in several U.S. states and elsewhere could derail efforts by governments to reopen economies and ease lockdown restrictions.

A downbeat forecast from the International Monetary Fund and the EU-U.S. trade tensions also weighed on the markets.

Japanese stocks ended lower as investors grappled with resurgent coronavirus infections in the U.S. and fresh tensions between the EU and Washington.

The updated International Monetary Fund economic forecasts also hit investor sentiment, with the institution warning the downturn is a "crisis like no other."

The Nikkei 225 Index tumbled, 274.53 points, or 1.2 percent, to 22,259.79 while the broader Topix closed 1.2 percent lower at 1,561.85. Automakers Honda Motor, Toyota, Nissan and Mazda Motor plunged 3-5 percent.

NEC rallied 2.4 percent after the electronics giant said it was talking with telecom group NTT about a capital and business tie-up for 5G wireless technology development.

Olympus soared 11.2 percent after it unveiled plans to sell its struggling camera division to focus on medical equipment.

NEC Corp. rose 2.4 percent on a Nikkei report that telecom conglomerate Nippon Telegraph & Telephone will acquire a 5 percent stake in the electronics company.

Australian markets hit their lowest level in more than a week after the country posted its biggest one-day spike in coronavirus cases in two months, raising fears of a possible second wave of infections.

The benchmark S&P/ASX 200 Index plunged 148 points, or 2.5 percent, to 5,817.70, while the broader All Ordinaries Index ended down 153.60 points, or 2.5 percent, at 5,928.

The big four banks fell between 2.3 percent and 3.5 percent, while mining heavyweights BHP and Rio Tinto declined 2.4 percent and 1.6 percent, respectively.

Lithium explorer Orocobre lost 2 percent after warning that sales volume of lithium carbonate would more than halve in the June quarter.

Energy stocks Woodside Petroleum, Santos, Origin Energy, Oil Search and Beach Energy plunged 3-7 percent as oil extended losses after falling more than 5 percent in the previous session.

Qantas Airways shares were placed in a trading halt after the beleaguered airline announced a plan to reduce costs by billions of dollars and raise fresh capital.

Seoul stocks fell sharply as investors fretted about a surge in coronavirus cases in major economies and escalating trade tensions.

The benchmark Kospi dove 49.14 points, or 2.3 percent, to 2,112.37. Market heavyweight Samsung Electronics and No.2 chipmaker SK Hynix both fell about 2 percent.

South Korea reported 28 more cases of the Covid-19 compared to 24 hours ago as of 12:00 a.m. Thursday local time, raising the total number of infections to 12,563.

Europe

European shares have moved modestly lower on Thursday as concerns about a spike in coronavirus cases in the U.S. has overshadowed a report showing consumer confidence in Germany has improved more than expected.

The forward-looking consumer sentiment index rose to -9.6 in July from a revised -18.6 in June, reflecting the rapid reopening of the economy after the coronavirus-related lockdown and an economic stimulus package, according to survey results published by market research group GfK. The score was forecast to rise moderately to -12 from June's initially estimated -18.9.

EU-U.S. trade tensions and the IMF's slashing of its forecasts for global growth have served to cap the upside to some extent.

While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the German DAX Index has edged down by 0.1 percent and the French CAC 40 Index is just below the unchanged line.

Payments processor Wirecard AG has moved sharply lower. The company's management board has decided to file an application for the opening of insolvency proceedings.

Royal Mail shares have also slumped. The postal operator said it would cut around 2,000 management posts, or about 20 percent of the total, to help save costs.

Outsourcing and services company Capita has also shown a notable move to the downside after warning of lower first-half revenue this year.

On the other hand, Fiat Chrysler Automobiles NV has risen after Italy approved a decree offering state guarantees for 6.3 billion euros to its Italian unit.

Deutsche Lufthansa shares have jumped as the European Commission approved Germany's 6 billion euros recapitalization of the German airline.

BAE Systems has also moved to the upside. Sales for the half year are expected to be broadly stable year on year whilst half-year profit is expected be approximately 15 percent lower than last year, the defense, security and aerospace firm said in a statement.

French food services and facilities management company Sodexo S.A has also advanced. The company said that following recent talks it had with USPP debt holders, it has decided to exercise its right to reimburse its $1.6 billion outstanding debt to ensure independence of action.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 20th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims dropped to 1.480 million, a decrease of 60,000 from the previous week's revised level of 1.540 million.

Economists had expected jobless claims to tumble to 1.300 million from the 1.508 million originally reported for the previous week.

Jobless claims pulled back further off the record high of 6.867 million set in late March, although the pace of decline has slowed considerably in the past two weeks.

Meanwhile, the Commerce Department released a separate report showing a substantial rebound in durable goods orders in the month of May.

The Commerce Department said durable goods orders spiked by 15.8 percent in May after plunging by a revised 18.1 percent in April.

Economists had expected durable goods orders to surge up by 10.9 percent compared to the 17.7 percent nosedive that had been reported for the previous month.

Excluding a significant rebound in orders for transportation equipment, durable goods orders jumped by 4.0 percent in May after tumbling by 8.2 percent in April. Economists had expected a 2.5 percent increase.

Another A report released by the Commerce Department on Thursday showed the slump in U.S. economic activity in the first quarter was unrevised from the previous estimate.

The Commerce Department said real gross domestic product tumbled by 5.0 percent in the first quarter, unchanged from the estimate provided last month.

The steep drop in GDP in the first quarter reflects a notable turnaround from the 2.1 percent jump seen in the fourth quarter of 2019.

The decrease was unrevised from the previous estimate as an upward revision to non-residential fixed investment was offset by downward revisions to private inventory investment, consumer spending and exports.

At 9:30 am ET, Dallas Federal Reserve President Robert Kaplan is due to speak in a moderated Q&A at an event entitled "Reinventing Bretton Woods Committee Webinar: The World Economy Transformed."

Atlanta Fed President Raphael Bostic is scheduled to speak to the Florida Chamber of Commerce on "Florida's Economic Relaunch -- What's Next?" at 11 am ET.

At 12 pm ET, Cleveland Fed President Loretta Mester is due to give welcoming remarks and host a webinar to "Answer Borrowers' Questions about the Paycheck Protection Program."

The Treasury Department is scheduled to announce the results of its auction of $41 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Cruise operators Norwegian Cruise Line (NCLH), Royal Caribbean (RCL), and Carnival (CCL) are moving sharply lower in pre-market trading amid concerns about the impact of a second wave of coronavirus infections.

Entertainment giant Disney (DIS) may also move to the downside after postponing the planned July 17th reopening of Disneyland in California.

Shares of KB Home (KBH) are also likely to come under pressure after the homebuilder reported better than expected fiscal second quarter earnings but a steep drop in orders.

On the other hand, shares of Rite Aid (RAD) are seeing significant pre-market strength after the drug store operator reported a much narrower than expected fiscal first quarter loss on revenues that exceeded estimates.

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