US stock futures are falling sharply this morning amid news of a new COVID strain identified within the United Kingdom, with the city of London imposing Tier 4 restrictions – similar to those enforced in February-March – to prevent a spike in contagions.
E-mini futures of the S&P 500 are leading the downtick this morning as they slide 74 points – or 2% – at 3,632, followed by futures of the value-focused Dow Jones Industrial Average, which are retreating 1.85% at 29,538.
Meanwhile, futures of the tech-heavy Nasdaq 100 index are seeing less pain in early futures trading activity, sliding only 1.3% at 12,547 as lockdowns have actually provided a tailwind for the tech industry around the world.
European countries have quickly moved to introduce a travel ban for passengers coming from the UK to prevent the strain from moving outside of the country’s borders, while European Union leaders are expected to meet today to coordinate the block’s response to the situation.
Meanwhile, the deadline to reach an agreement on Britain’s exit from the European economic block keeps approaching with leaders possibly having some busy days ahead if the COVID situation gets out of hand.
Today’s downtick, however, has probably been partially offset by positive news from the US Congress, as lawmakers managed to pass a $900 billion stimulus bill to further assist the country’s economic recovery.
This relief would include a direct payment of $600 to adult Americans and another $600 granted per child along with more funds for the Paycheck Protection Program (PPP), which aims to protect workers from being laid off by providing companies with the resources to cover their payroll while they emerge from the crisis.
Further resources are also being extended to the federal unemployment program to keep it running, as continuing jobless claims in the country remain three times higher than they were before the pandemic stroked.
Meanwhile, only two days ago, the US Food and Drug Administration (FDA) granted emergency-use approval for Moderna’s COVID-19 vaccine, with doses starting to be rolled out in the country as soon as this week to help the nation in fighting an outbreak that has so far taken the lives of almost 325,000 Americans.
What’s next for US stock futures?
Today’s downtick in US stock futures forced both the S&P 500 and the Nasdaq 100 index to revisit their early-September all-time highs, with the price bouncing off that particular level during intraday activity.
Whether that threshold holds during the American stock trading session or not will depend on how individual stocks react to the news about this novel COVID strain, although the plunge should be limited given that there are already two highly effective vaccines being rolled out in most developed countries.
That said, the efficacy of the vaccine in protecting individuals from this new strain of the virus could be determinant, as doubts about the treatment’s ability to provide the same level of inoculation could end up triggering a sharper correction with countries possibly contemplating the idea of reimposing travel bans and business shutdowns similar to those seen in February-March.