US stock futures are trading lower while investors focus on corporate earnings. The Dow Jones Industrial Average futures closed in negative territory yesterday despite the fact that the Nasdaq index went into another all-time high territory. This confirms that the stock market rally that we are experiencing is very much uneven. The S&P 500 also experienced a volatile session yesterday; the index reversed its losses and closed the day with decent gains.
Today it is about corporate earnings, and companies like General Electric, Verizon, Microsoft, and Johnson & Johnson will announce their earnings today.
A factor that is likely to adversely influence the stock futures is that the chances of rapid approval of a new second stimulus package have started to evaporate. This happened after US President Joe Biden confirmed that it might take a few weeks for a new stimulus package to get a green light from lawmakers during his speech yesterday. So far, investors and traders thought that this will be a walk in a park as Democrats control the White House, the Congress, and the Senate. However, Biden’s tune yesterday made investors think that this may not be that simple. Yes, the new stimulus package may not take as long as the previous one did, but the fact is that it isn’t going to become a reality that soon as well.
The dimming hopes around the fiscal stimulus package are also influencing the price of oil. On the one hand, you have a new variant of coronavirus, which is hindering growth. Lawmakers keep on tightening the coronavirus restrictive measures to stop the threat. On the other hand, the coronavirus vaccine process isn’t running that smoothly either. All of this is keeping the bulls on the sideline. Hence, we do not see any serious upward movement in oil prices. Crude oil prices are very much consolidating, and this may remain the case for some time now.
Another factor with respect to oil prices that we all need to keep in mind is that if Joe Biden makes a peace agreement with Iran as the Obama administration did–and the whole peace agreement was done under the supervision of Joe Biden—it may not be that positive for oil prices. This is chiefly because any positive progress on this front means more oil supply in the market. Iran has been aching to get its oil into the market. Excessive supply is the last thing that the oil market needs at this particular time.
As for the coronavirus, there has been some more positive news from Moderna for investors. The company is accelerating its work to address the newly discovered variant of coronavirus in South Africa. The last thing that we need now is another coronavirus variant, which starts to spread like there is no tomorrow, and lawmakers start to extend the current lockdown restrictions even further. Several countries have already adopted precautionary measures as lawmakers ban flights from countries like South Arica to stop the spread of new variants. Moderna is confident that its vaccine is highly effective against the new variant of coronavirus, which is found in the UK and in South Africa.