Dow set to sink 400 points as new viral strain overshadows fresh coronavirus aid

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Dow set to sink 400 points as new viral strain overshadows fresh coronavirus aid

Tesla poised for first day of trading as an S&P 500 member in Christmas week action

U.S. stock-index futures on Monday were poised for their worst day since October, as investors focused on the emergence of a fast-spreading variant of the novel strain of coronavirus that causes COVID-19, overshadowing optimism from news over the weekend that U.S. lawmakers agreed on a pandemic-relief deal.

On Christmas week, investors will also look toward the first day of trade for Tesla Inc.. The stock, which officially entered the S&P 500 on Friday, accounts for 1% of the broad-market index’s price swings at its market value of over $650 billion.

How are stock benchmarks performing?

  • Futures for Dow Jones Industrial Average YM00, -1.67% YMH21, -1.68% were down 478 points, or 1.6%, to reach 29,631, which would represent the worst day for the index since Oct. 28, FactSet data show.
  • S&P 500 index futures ES00, -1.91% ESH21, -1.89% traded 71.70 points, or 1.9%, lower at 3,635.50.
  • Nasdaq-100 futures NQ00, -1.21% NQH21, -1.19% retreated 160 points to reach 12,552.75, a drop of 1.3%.

On Friday, the stock market closed higher for the week:

What’s driving the market?

Market participants to start Christmas week trade were contending with reports from Britain and South Africa of a new strain of coronavirus that has so far caused parts of London to invoke tighter lockdown and social-distancing procedures.

The sharp pullback in equities comes even as experts warn against overreacting and note that no evidence indicates that the variant is a more virulent strain of COVID-19, even if it is more contagious.

News of the virus’s evolution also comes despite an expected vote on a fresh fiscal spending bill that is paired with fresh aid for out-of-work Americans and businesses that have been devastated by the COVID-19 pandemic.

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Over the weekend, Senate Majority Leader Mitch McConnell said a deal had been reached on an almost $900 billion coronavirus relief package and a vote on the bill is set for later Monday.

“Make no mistake about it, this agreement is far from perfect. But it will deliver emergency relief to a nation in the throes of a genuine emergency,” said Senate Democratic Leader Chuck Schumer.

Peter Cardillo, chief market economist at Spartan Capital Securities said that the “markets decline has [nothing] to do with the long-awaited stimulus package agreement struck by lawmakers, but rather the run-away virus situation in Great Brittan and Europe’s new travel restrictions.”

Meanwhile, markets are watching for the first trading day for Tesla Inc. TSLA, +5.96% as a member of the S&P 500 index, marking one of the largest and, perhaps, volatile members to enter the broad-market index.

U.S. stock-index futures attempted to edge higher but were seeing relatively tepid gains Sunday night, even as Congress reached a deal on a $900 billion coronavirus relief package. Futures for the Dow Jones Industrial Average {s: ym00] rose 57 points, or 0.2%, at 30,172, those for the S&P 500 undefined were flat at 3,705.75, while Nasdaq-100 futures rose 0.2% to reach 12,740.50. Senate Majority Leader Mitch McConnell said late Sunday described the agreement, one seen by many market participants as vital to helping troubled American workers and businesses, as “far from perfect,” on the Senate floor. The deal, which still requires a vote on Congress, would come as the COVID-19 pandemic rages in much of the country. The relief package would see qualifying Americans receive direct payments of $600 and $300 a week in enhanced federal unemployment benefits. It would come after the stock market closed mixed on Friday, in the last full trading week of December, with the Dow undefined finishing 124.32 points, or 0.4%, lower at 30,179.05, the S&P 500 undefined ending down 13.07 points, or 0.4%, to close at 3,709.41, after hitting an intraday record high at 3,726.70. The Nasdaq Composite Index undefined lost 9.11 points, or 0.1%, on Friday to close at 12,755.64, after notching its intraday all-time high at 12,809.60. Congressional efforts toward a fresh aid package to combat the detrimental economic effects of the pandemic were coupled with a roughly $1.4 trillion annual fiscal spending package, with lawmakers racing to avert a government shutdown set to take effect at 12:01 a.m. Monday