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“I was reading in the paper today that Congress wants to replace the dollar bill with a coin. They’ve already done it. It’s called a nickel.” ― Jay Leno
Equity futures are getting hit relatively hard this morning following continued surges in COVID case counts as hospitalizations have now exceeded their peaks from the Summer. In response, states are instituting more restrictions on movement. While the broader market is lower, Nasdaq futures are bucking the trend and still indicated to open in positive territory as investors rotate back into the stay at home stocks.
Against a backdrop of rising COVID cases, economic data today was generally positive. CPI came in weaker than expected, so maybe instead of a nickel, the coin referenced in the quote above should be a dime instead. In terms of jobless claims, both initial and continuing claims came in lower than expected and fell to their lowest levels since the pandemic.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, economic data out of Europe, trends related to the COVID-19 outbreak, and much more.
The chart below is from the second page of our Morning Lineup and shows where the S&P 500 is trading on a daily basis relative to its 50-day moving average. Yesterday, the S&P 500 closed just shy of levels we consider to be extreme (>2 standard deviations from 50-DMA). This is the same level that the S&P 500’s rally ran out of steam back in early September. While extreme overbought levels hardly mean that a pullback is guaranteed, when the S&P 500 gets to these levels, it’s not uncommon for the market to take at least a short-term pause in order to catch its breath.