US stock futures edge lower as investors fret about the Delta variant's spread ahead of Fed minutes
- US stocks looked set to open lower on Wednesday after snapping a run of record highs the previous session.
- But Asian equities rebounded after China's COVID-19 cases dipped and Japan's exports surged.
- Focus is now on the Fed's July minutes, due later, for signs of when tapering could begin.
US stock futures edged lower on Wednesday, after the Dow and S&P 500 snapped a five-day run of record highs at the previous close, as pandemic worries once again gripped investors.
Futures linked to the Dow Jones were down 0.26%, while those for the S&P 500 were 0.13% lower as of 6:20 a.m. ET, suggesting a lower start to trading later in the day. The Nasdaq was broadly flat.
COVID-19 fears revived as Delta variant outbreaks around the world continue, including in the US. The US is now seeing its fastest rise in cases in over six months, in sharp contrast to June, when cases were increasing at the slowest rate since March 2020, according to Deutsche Bank strategists. COVID-related deaths in the US rose to over 1,000 on Tuesday for the first time since March, Reuters reported.
The S&P 500 declined 0.7% from its all-time high on Tuesday, its largest single-day drop since mid-July. The Dow Jones Industrial Average shed 280 points to close 0.8% lower. The tech-heavy Nasdaq 100 pulled back around 0.9%.
Pandemic-sensitive assets were among the biggest underperformers. The S&P 500 airlines index fell nearly 3%, for its fourth consecutive move lower. The index is now down 24% from its high in April, when investors were far more optimistic about a return to normal economic activity, on the back of the vaccine rollout.
Home Depot's stock closed 4.2% lower, for the largest decline on the Dow Jones, after the home improvement retailer reported wobbly quarterly earnings from fewer customers visiting its stores. Walmart shares fell 0.3%, even though the retailer posted major growth in its advertising business and raised its full-year outlook.
Investors will watch the Federal Open Market Committee's minutes of its July meeting, due later Wednesday, to see whether most officials are backing a taper of asset purchases sooner rather than later.
"That could boost the US dollar once again," said Jeffrey Halley, a senior market analyst at Oanda. The dollar index, which measures the greenback against a basket of six currencies, was last 0.1% lower at 93.03.
Asian equities diverged from the US markets' lead by rebounding strongly Tuesday, as investors looked beyond Beijing's escalating regulatory crackdowns for other reasons for optimism. China reported fewer COVID-19 cases and Japan's exports rose for a fifth straight month of double-digit growth in July, contributing to a boost in sentiment for equities, Halley said.
The Shanghai Composite was up 1.1%, Tokyo's Nikkei put on 0.5%, and Hong Kong's Hang Seng added 0.3%.
In Europe, UK inflation in July dropped unexpectedly to 2%, official figures showed, compared with economist forecasts of 2.3%. But analysts said the slowdown in consumer price rises was likely a blip, and the rate may soon pick up. London's FTSE 100 lost 0.2%, as did the Euro Stoxx 50, and Frankfurt's DAX.
Oil futures recovered some losses from their four-day slump after the American Petroleum Institute reported inventories fell 1.2 million barrels for the week ending August 13. Official inventory figures from the Energy Information Administration are due for release later Wednesday.
Brent Crude rose 0.5% to $69.44 a barrel, and West Texas Intermediate increased 0.4% to $66.64 a barrel early Wednesday.
Gold held onto its gains from the past few sessions, trading about 0.04% higher at $1,789 an ounce.