Dow Jones futures plunge 935 points, second wave concerns grow

US markets look set to start the week off in a volatile fashion, as Dow Jones futures plummet.

Dow Jones expected to plunge at the open

As of 2:47am (EDT), Dow Jones Industrial Average (DJIA) futures were trading down 935 points or 3.66%, suggesting the market would open significantly lower on Monday, 15 June.

S&P 500 futures and NASDAQ Composite futures were also trading lower – down 83 points and 221 points, respectively, according to Bloomberg.

This comes after US markets rebounded on Friday, following a horror showing on Thursday which saw the DJIA plunge 1,861 points or 6.9%.

Investors appear to have grown skittish in the face of a potential second wave Covid-19 outbreak, as well as dour comments from the US Federal Reserve last week, with the central bank forecasting the US economy will shrink by 6.5% in 2020.

Regardless of such forecasts, there were pockets of optimism on Friday, with Boeing, Dow and Raytheon all rising strongly. By comparison, Wal-Mart, Merck and Intel were the worst performing Dow constituents during last week's final session.

Catalysts behind the pullback

Elsewhere, Ed Yardeni, from Yardeni Research, over the weekend argued that 'The melt up [since the March lows] may need to take a break, as sentiment has turned too bullish too rapidly.'

'Now that reopening is happening, there's fear of suboptimal results: less social distancing triggering a second wave of the virus, followed by another round of lockdowns,’ Mr Yardeni finished.

Indeed, potential problems stemming from the current coronavirus situation continue to mount – from both an economic and public health perspective. For example, Sky News today reported that US cases of Covid-19 have surged in recent days, with ‘Alabama, Florida and South Carolina report[ing] a record number of new cases for the third day in a row on Saturday.’

The United States continues to top the list of most recorded coronavirus (Covid-19) cases, last standing at ~2.16 million – representing over 25% of the world's total reported coronavirus cases.

Data releases to watch

Looking at the US economic calendar for the week ahead: job openings data (April) will be released on Tuesday; federal budget data (May) will be released on Wednesday; initial jobless claims for the week ending 6 June will be released on Thursday; and consumer sentiment index data (June) will be released on Friday.

There are no significant US company earnings releases set to take place this week.

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