The Dow Jones futures dropped more than 100 points last Sunday, as investors are cautious about the overall economic sentiment as well as the jump in coronavirus death tolls.
Last week, the U.S. jobless claims total went over 30 million affecting the Dow Jones and S&P 500. But despite the unemployment surge, the S&P 500 recorded its best month since World War 2.
The Fed also announced in their press conference last week that they will maintain its interest rates while the economic recovery is ongoing. They vaguely mentioned that they will continue their purchasing programs.
Over the weekend, President Donald Trump also expressed blame that a “mistake” in China was the cause of the coronavirus spread. This statement from Trump may cause more tension in the U.S. and China as their Treasury yields fall.
Remdesivir, coronavirus death tolls factoring in
Aside from the recent jobless claims report, developments from Gilead may also influence the Dow Jones this week as they have ongoing discussions with the Food & Drug Administration (FDA) to release Remdesivir to the public.
The White House also recently announced a coronavirus testing plan in anticipation of businesses slowly re-opening across American states. However, the World Health Organization also reported last week that the U.S. had its highest death toll of coronavirus cases.
Warren Buffett, other investors unload assets
Warren Buffett, along with his lieutenants at Berkshire Hathaway has sold all of its airline assets. The firm also had little participation in the stock market as it’s currently securing cash positions.
During the Berkshire meeting, one advice Warren Buffet suggested to its investors was to buy an index fund. He further adds that it’s better to “invest in America” highlighting the S&P 500 index fund, rather than be dependent on companies other people tell you to invest in.
On the other hand, Art Hogan, National Securities’ chief market strategist, tells CNBC Trading Nation on May 1 that a retest of March low on the Dow Jones is unlikely as he adds:
“That pace at which we got to the correction here is the fastest that we’ve ever seen […] Usually it takes the Fed and certainly Congress a much longer time to adjust to the here and now and to find the corporate policies to support the economy, and they did that in record time.”
Investors are in anticipation of what’s in store for the Dow Jones this week.
Once Remdesivir distribution is up and running and more economic developments come in, we might see more volatility in the markets.