1. Stock futures give up gains after Fed’s Powell sees ‘significant downside risks’
U.S. stock futures were pointing to a lower open Wednesday for the Dow Jones Industrial Average after blue chips logged a second day of losses and the Nasdaq broke its six-session winning streak. The S&P 500, which snapped a three-session winning streak, the Dow and Nasdaq each dropped about 2% on Tuesday on concerns about whether reopening the economy might cause a second wave of coronavirus infections and a spike in deaths.
Federal Reserve Chairman Jerome Powell said Wednesday that more measures likely will be needed to pull the economy out of its current downturn. “While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell added.
Hedge fund pioneer Stanley Druckenmiller said Tuesday night, “The wild card here is the Fed can always step up their purchases” of assets. However, Druckenmiller said the stock market is historically overvalued. “The risk-reward for equity is maybe as bad as I’ve seen it in my career.”
2. House Democrats unveil $3 trillion coronavirus bill
The House Democrats’ latest coronavirus relief bill, set for a possible vote Friday, would face an uncertain future in the Senate. Republicans on Capitol Hill and the White House want to take a pause to see how the already unprecedented emergency fiscal and monetary measures work. House Speaker Nancy Pelosi, D-Calif., on CNBC’s “Mad Money” called the $3 trillion package a “big ticket” bill for a “big problem.”
The over-1,800-page bill includes nearly $1 trillion in relief for state and local governments, a second round of direct payments to Americans, about $200 billion for hazard pay for essential workers, and $75 billion for coronavirus testing and contact tracing. Democrats argue that rising Covid-19 infection rates and an unemployment rate not seen since the post-World War II era require further action by the government.
3. California state colleges plan virtual classes this fall
A virtual ghost town at California State University of Long Beach, which announced it will extend its closer through the end of the semester during this coronavirus pandemic in Long Beach on Tuesday, March 17, 2020.Brittany Murray | MediaNews Group | Long Beach Press-Telegram | Getty Images
California is moving further into its reopening process, allowing some offices, malls and outdoor museums to resume operations with modifications, even as the 23-campus California State University System plans to offer most courses for the fall online. The decision comes as schools across the country consider what to do for the upcoming academic year. Dr. Anthony Fauci, one of the country’s top virologists, told a Senate panel Tuesday that the U.S. will unlikely have medical responses to the pandemic ready in time for the new school year. U.S. cases approached 1.4 million Wednesday morning with over 82,300 deaths. Globally, total infections exceeded 4.2 million as fatalities neared 300,000.
4. New cases in South Korea linked to night clubs
People wearing protective face masks walk through the street at night in the Itaewon area of Seoul, South Korea, on Saturday, May 9, 2020.SeongJoon Cho | Bloomberg | Getty Images
The human cost to reopening businesses continued to play out across Asia, as South Korea reported 26 new cases and one new death attributed to a cluster of infections linked to night clubs. At least 119 people from that cluster in recent days have tested positive for Covid-19, spurring fears of a second wave after South Korea began to ease restrictions intended to contain the virus. In China, health authorities called for continued vigilance even though the peak of its epidemic has passed. But in the past two weeks, new cases have been reported in seven provinces, including Hubei, where the outbreak originated late last year. On Monday, Shanghai Disneyland reopened for the first time in three months.
5. Federal pension fund is directed to halt Chinese stock investments
U.S. President Donald Trump speaks during a press briefing in the Rose Garden of the White House in Washington, D.C., on Monday, May 11, 2020.Oliver Contreras | Sipa | Bloomberg via Getty Images
President Donald Trump and the Labor Department directed a board charged with overseeing billions in federal retirement dollars to halt plans to invest in Chinese companies. An international index, the Thrift Savings Plan, is set to start tracking later this year. China is included in its equities in a broad range of developed and emerging markets. Senators including Florida Republican Marco Rubio and New Hampshire Democrat Jeanne Shaheen have led the outcry. Carson Block, a longtime short seller who announced a short position against China-based Luckin Coffee before widespread fraud findings, spoke highly of the Trump administration’s move.
— Reuters and NBC News contributed to this report.