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U.S. Stock Futures Slide as Economic Concerns Flare Up

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07/16/2020 | 06:51am EDT

By Caitlin Ostroff

U.S. stock futures slipped Thursday, while Chinese stocks dropped by the most in over five months, amid fresh concerns about rising coronavirus infections and the global economy's faltering recovery from the pandemic.

Contracts tied to the S&P 500 fell 0.8%, indicating that stocks could come under pressure after the New York opening bell.

Overseas, the Shanghai Composite Index retreated 4.5% by the close of trading in its steepest drop since February. Data on Thursday showed pockets of weakness, especially in China's retail sector, even as the world's second-largest economy returned to growth. Meanwhile, the pan-continental Stoxx Europe 600 declined 0.8%.

While economists expect U.S. retail sales data for June, due at 8:30 a.m. ET, to show a jump, investors are growing increasingly concerned that further recovery could be stymied by a recent surge in infections across the country. Some states are closing restaurants, bars and stores to slow its spread, and that's likely to dampen consumer spending, a crucial driver of the U.S. economy.

"The key issue now is concern about a new wave of infections and the potential impact on the economic recovery," said Andrew Hunter, senior U.S. economist at Capital Economics. Even if the retail sales data is strong, "it's sort of old news and the bigger concern is how big of a potential slowdown are we looking to in July," he said.

Investors will also be looking at jobless claims data for the week ending July 11, due at 8:30 a.m., for an indication of whether rising infections and measures to contain the outbreak have impacted employment. The weekly tally of new unemployment claims by laid-off workers has slowly trended downward in recent weeks, but remain at historically high levels.

More major banks will release quarterly earnings on Thursday, with Bank of America and Morgan Stanley slated to report before the New York opening bell. At rival Goldman Sachs Group, traders and investment bankers posted near-record revenue on Wednesday to keep firmwide profits steady, throwing an elbow to larger commercial-bank rivals that have blamed the pandemic for poor quarterly results.

Shares in Twitter fell 6.5% in offhours trading after the social media company was hit with a widespread attack Wednesday that allowed hackers to take over an array of accounts including those of celebrities, politicians and billionaires.

In bond markets, the yield on the 10-year Treasury fell to 0.616%, from 0.629% Wednesday.

Across Asia, most major equity benchmarks ended the day down. Hong Kong's Hang Seng Index retreated 2%, while Japan's Nikkei 225 lost about 0.8%.

Data on China's retail sector showed it is recovering more slowly than expected, with sales falling 1.8% in June from a year earlier. Economists had projected a 0.3% growth.

Investors also said that moves in stock indexes world-wide are likely outsized due to lower trading volumes.

"We're entering a period in the summer where liquidity tends to diminish, " said Yuko Takano, a portfolio manager at Newton Investment Management. Ms. Takano said she is focusing on corporate earnings over the next few weeks to assess how corporations have fared, and expects economic data to remain choppy.

--Chong Koh Ping contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION 0.46% 26.47 Delayed Quote.-25.18%
DJ INDUSTRIAL 0.12% 27931.02 Delayed Quote.-2.25%
HANG SENG -0.16% 25185.34 Real-time Quote.-10.52%
MORGAN STANLEY 0.23% 52.3 Delayed Quote.2.07%
NASDAQ 100 -0.12% 11164.446946 Delayed Quote.28.00%
NASDAQ COMP. -0.21% 11019.300969 Delayed Quote.23.07%
NIKKEI 225 0.17% 23289.36 Real-time Quote.-1.72%
S&P 500 -0.02% 3372.85 Delayed Quote.4.42%
S&P/CITIC 300 INDEX 0.02% 4086.93 Delayed Quote.13.46%
S&P/CITIC 50 INDEX 0.02% 3969.33 Delayed Quote.4.70%
STOXX EUROPE 600 -1.20% 368.07 Delayed Quote.-10.42%
STOXX EUROPE 600 NR -1.19% 808.05 Delayed Quote.-8.88%
THE GOLDMAN SACHS GROUP, INC. -0.20% 207.97 Delayed Quote.-7.74%
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