Wall Street’s main indexes were set to open lower on Thursday after data confirmed the economy suffered its steepest contraction since the Great Depression in the second quarter, adding to gloom from job losses and a resurgence in coronavirus cases.
Gross domestic product collapsed at a 32.9% annualized rate last quarter, a Commerce Department report showed, as business activity came to an abrupt halt due to efforts to slow the virus outbreak.
Jobless claims numbers also showed another rise in the latest week, adding to signs that the momentum of economic recovery has slowed, especially in southern and western states.
The S&P 500 is about 4% below its Feb. 19 record high after coming within 3% of that level last week.
The U.S. Federal Reserve on Wednesday acknowledged the surge in cases was likely stalling recovery, while pledging to support the economy as long as necessary, guaranteeing it will continue to flood the financial system with cheap funds and lifting Wall Street’s three main indexes late in the session.
Qualcomm Inc , United Parcel Service Inc , and Procter & Gamble Co were among the early gainers after results releases, with Johnson & Johnson up 2% as it started human safety trials for its COVID-19 vaccine.
Corporate earnings have tended to be better than expectations so far, but the scale of the economic damage from the crisis, and likelihood that it will drag on are again giving traders pause for thought.
The White House and Congress are still at loggerheads over a pandemic relief plan ahead of the lapsing of enhanced $600-per-week unemployment benefits on Friday, threatening households’ ability to spend and cover their bills.
Apple Inc , Amazon.com Inc , Alphabet Inc and Facebook Inc will post results at the same time for the first time later on Thursday, with some on Wall Street questioning their valuations after this year’s gains.
Shares of the companies, which have a combined market value of about $5 trillion or almost a fifth of the whole S&P 500, fell between 0.4% and 0.9% in premarket.
The CEOs of all four companies took jabs from lawmakers over antitrust and other issues in Congress on Wednesday.
“These companies have really been carrying the entire stock market in herculean fashion,” said Ryan Giannotto, director of research at GraniteShares ETFs in New York.
“It’s a test of this thesis that technology can be used to overcome or mitigate the impacts of the coronavirus pandemic which does not seem to be abating anytime soon.”
At 8:40 a.m. ET, Dow e-minis were down 235 points, or 0.89%, S&P 500 e-minis were down 26.75 points, or 0.82% and Nasdaq 100 e-minis were down 90.75 points, or 0.85%.
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