1. Dow set to sink on concerns about a second wave of coronavirus in U.S.
Dow futures were pointing to an over 600-point plunge at Thursday’s open as worries intensify about a second wave of the coronavirus in America. As nearly two dozen states report sharp rises in Covid-19 cases, total infections in the U.S. have now topped 2 million, according to data from Johns Hopkins University on Thursday morning. So-called reopening trade stocks from airlines to cruise lines to retailers are under heavy pressure in the premarket. Nasdaq futures were also sinking Thursday morning after the Nasdaq Composite bucked Wednesday’s declines on Wall Street, closing above 10,000 for the first time ever.
While the pace of new weekly jobless claims is expected to continue to slow, the government is still seen reporting nearly 1.6 million first-time filings for unemployment insurance last week. New claims were up nearly 1.9 million the prior week, the first time below 2 million since the week ended March 14. The government’s claims data, out at 8:30 a.m. ET, comes after May’s shocking 2.5 million nonfarm job gains.
2. Fed sees near-zero rates through 2022
Along with the rate decision, central bankers projected the economy will shrink 6.5% this year due to the unprecedented coronavirus lockdowns. The Fed also said it will continue to increase its bond holdings, targeting Treasury purchases at $80 billion per month and mortgage-backed securities at $40 billion.
3. Frothy trading in bankrupt companies, penny stocks sent market red flags
Bubbly price moves in the stocks of bankrupt companies, a jump in the number of bullish investors and surging activity by small investors in stock options are all signs that the stock market may have run too far, too quickly. There’s even been a big rally in stocks trading under $1 per share, so-called penny stocks, which racked up an average gain of nearly 80% in the past week. With the Dow up about 48% from its March 23 low, as of Wednesday’s close, analysts have been seeing signs that the market has been overbought. The sharp drop in stock futures Thursday indicated that some of the froth may be beginning to unwind. Shares of Hertz, which filed for bankruptcy last month, was down 19% in the premarket following a 39% drop on Wednesday.
4. Grubhub snubs Uber, agrees to merge with Just Eat
Food delivery workers on bicycles travel along a street in New York, U.S., on Tuesday, March 17, 2020.
Debetrius Freeman | Bloomberg | Getty Images
Shares of Grubhub, which has seen a boost in orders as restaurants were forced to become delivery only, were jumping 7% in Thursday’s premarket after the American food delivery service announced late Wednesday a merger with Europe’s Just Eat Takeaway. Sources told CNBC that U.S.-based Uber, which had been in negotiations with GrubHub to combine it with Uber Eats, was left confused by the decision. Grubhub’s deal with Just Eat is unlikely to garner as much regulatory attention as a combination with Uber would have. Privately held Doordash is the market leader in the U.S., according to the latest data from research firm Second Measure.
5. Amazon bans police-use of its facial recognition tech
Amazon is banning use of its facial recognition software by police for one year, as pressure builds on tech companies to respond to the police killing of George Floyd during a Memorial Day arrest in Minneapolis. While the House Committee on Oversight and Reform has held a number of hearings on the use of facial recognition, it has yet to introduce a bill regulating the technology. Amazon’s announcement comes just days after IBM said that it’s exiting the facial recognition business, with CEO Arvind Krishna calling on Congress to enact reforms to advance racial justice and combat systemic racism.