Wall Street futures plunge as Mnuchin ends lending programs

(Reuters) – U.S. stock market futures fell Thursday night after Treasury Secretary Steven Mnuchin halted some Federal Reserve emergency pandemic loan programs.

S&P 500 Emini Futures EScv1 fell 0.75% after Mnuchin asked the central bank to return money allocated under the March pandemic relief law for emergency loans to businesses, nonprofits and to local governments, marking the Dec. 31 end of most crisis response programs that the Federal Reserve has deemed vital to keeping the economy stable.

The 10-year U.S. Treasury yield US10YT = RR also slipped, suggesting a flight to safety among investors.

“If you don’t have these programs, generally it’s a safe situation for the markets. They weren’t used much, but they were there as a safety net and even their thought was seen as a safety net, ”said Andy Richman, director of bond strategies at Sterling Capital Management in Jupiter, Fla.

Previously, US stocks ended in positive territory after new stimulus hopes boosted investor sentiment in a session full of concerns about the rise in closures and layoffs linked to skyrocketing rates. COVID-19 infection.

All three major stock indexes got a boost after Senate Minority Leader Chuck Schumer said Senate Majority Leader Mitch McConnell agreed to restart negotiations to work out a new tax relief program.

“We’ve seen this manual before, where investors flock to the security of technology and growth when the economy shows signs of slowing,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, Carolina. North. “But everything is changing now that there is hope for the next stimulus package.”

“It is clear that the markets are rebounding on this optimism.”

Still, skyrocketing COVID-19 infection rates have steered investors towards market-leading growth stocks that have shown resilience in the face of the pandemic.

The Philadelphia SE Semiconductor Index .SOX, which thrived throughout the health crisis, significantly outperformed the market as a whole, growing 1.6%.

“In a COVID world, the semifinals are a safer game because they aren’t affected as much due to closures,” Detrick added.

The number of U.S. workers filing new unemployment benefits claims rose unexpectedly last week, with data painting a grim picture of increasingly high layoffs as coronavirus cases and subsequent closures continue to hamper the labor market.

The record number of infections led to a 50% increase in COVID-related hospitalizations and prompted schools and businesses to shut down again, thwarting the recovery of the world’s largest economy after the deepest recession since the Great Depression.

The Dow Jones Industrial Average .DJI rose 44.81 points, or 0.15%, to 29,483.23, the S&P 500 .SPX gained 14.08 points, or 0.39%, to 3,581.87 and the Nasdaq Composite .IXIC added 103.11 points, or 0.87%, to 11,904.71.

Of the 11 main sectors of the S&P 500, energy .SLEEP and technological sharing .SPLRCT won the most, while utilities .SPLRCU and health .SPXHC were the only losers in percentage.

The third quarter reporting season is nearing the finish line, with 472 of the S&P 500 companies reporting. Of those, 84.5% beat the consensus, according to data from Refinitiv.

Macy’s Inc MN reported a 20% drop in quarterly comparable store sales and the department store is forecasting a tough holiday season.

Chipmaker Nvidia Corp NVDA.O forecast a slight drop in data center chip sales, but the company exceeded quarterly revenue guidance.

L Brands Inc LB.N jumped 17.7% after posting better-than-expected quarterly results and a 56% jump in same-store sales.

Tesla Inc TSLA.O Shares rose for the third consecutive session to hit an all-time high, riding the wave of its impending inclusion in the S&P 500, announced on Monday.

Rising issues outnumbered falling issues on the NYSE by a ratio of 1.77 to 1; on the Nasdaq, a ratio of 1.80 to 1 favored the advancers.

The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 87 new highs and 10 new lows.

Volume on the US stock exchanges was 10.94 billion shares, compared to an average of 10.55 billion over the last 20 trading days.