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London (CNN Business)The breathless run-up in stocks in recent weeks has met some resistance.
What’s happening: Federal Reserve Chair Jerome Powell’s cautious stance on the economic recovery is giving some investors pause Thursday, with Japan’s Nikkei diving 2.7% and Europe’s Stoxx 600 falling more than 2% in early trading. Dow futures are off 2%, or more than 520 points.Selling is also being spurred by fears of a possible second wave of coronavirus infections as parts of the world reopen. The United States has now passed 2 million confirmed cases of the virus, according to data from Johns Hopkins.
Covid-19 hospitalizations since Memorial Day have gone up in at least a dozen US states: Alaska, Arkansas, Arizona, California, Kentucky, Mississippi, Montana, North Carolina, Oregon, South Carolina, Texas and Utah.
Dow set to tumble 600 points as investors grow fearful about the economy”While it might take several weeks to know if this is a broader problem, infection counts will again become a key barometer of risk that cannot be ignored,” Hussein Sayed, chief market strategist at FXTM, told clients Thursday.Read MoreThe United States isn’t the only place to see infections surge. The number of cases in Mumbai, India has surpassed 50,000, more than what was reported in the first epicenter of Wuhan, China.Jitters about the virus outlook are compounded by the Federal Reserve’s uncertainty about the trajectory for the US economy.Powell on Wednesday committed to keeping the central bank’s foot on the gas for years to come, but was hesitant to serve as a cheerleader on the pace of growth or health of the job market moving forward.”The path ahead for the economy is highly uncertain and continues to depend to a significant degree on the path of the pandemic,” Powell said.In the meantime, he said, there’s “a lot of work to do in the labor market.” He observed that “unemployment remains historically high” even though economic activity has increased recently.What it means: Riskier assets have been on a tear recently, with the S&P 500 up more than 42% from its March low. Goldman Sachs notes that spreads in credit markets are also now “consistent with the early stage of an economic recovery.” But the debate about whether markets recovered too fast, too soon is still raging, leaving investors on edge and vulnerable to bad news.The big question: If it becomes clear that a second wave of infections is materializing in the United States or elsewhere, how much would assets like stocks fall? Some argue that unprecedented support from central banks like the Fed would limit the risk, while others are worried that may not be enough to prevent a correction.
Amazon pauses police use of facial recognition tech
Protests against police brutality are putting pressure on tech companies to reevaluate the software they offer to law enforcement.The latest: Amazon (AMZN) said Wednesday it will stop providing its facial recognition tools to police forces for one year amid questions about the company’s commitment to fighting systemic racism, my CNN Business colleague Brian Fung reports.Amazon said it made the decision in hopes of giving Congress time to “implement appropriate rules” for police use of facial recognition algorithms, which the US government has found are often more likely to misidentify people of color.Amazon’s Ring subsidiary has partnered with more than 1,300 law enforcement agencies around the country, giving many agencies far greater visibility into communities through the eyes of homeowners and their video surveillance cameras. And there appear to be few, if any, limits on law enforcement’s ability to apply Amazon’s Rekognition software to video footage obtained from Ring. Last year, in response to questions from CNN, Ring said its policies do not govern how police departments handle or store video evidence.Pressure builds: Amazon’s announcement follows a letter from IBM (IBM) to US lawmakers earlier this week saying the computing giant will no longer offer facial recognition services and condemning the use of facial recognition “for mass surveillance, racial profiling [or] violations of basic human rights and freedoms.”More action: Less than a week after Reddit cofounder Alexis Ohanian stepped down from the company’s board and urged he be replaced with a black candidate, Reddit has named Michael Seibel, the CEO of Silicon Valley startup accelerator Y Combinator, as the first black board member in the company’s history.
Tesla shares top $1,000 as electric car fervor soars
Tesla (TSLA) is close to becoming the world’s most valuable automaker, approaching Toyota (TM) as excitement about its electric truck pushes shares above $1,000.Soaring stock: Tesla’s market value has topped $190 billion — which means it’s now worth more than twice as much as Volkswagen, which is valued at $85 billion. Tesla — whose shares have shot up 145% this year — is now within spitting distance of Toyota, which has a market value of $210 billion.Remember: Tesla produced almost 103,000 vehicles in the first quarter, while Toyota made close to 2.4 million.The hype is driven in part by investor excitement over competitor Nikola, which recently debuted on Wall Street after completing a merger with VectoIQ, a shell company that was already public. Shares of the electric truck maker are up more than 80% this week.Watch this space: Electric vehicles could get a boost in popularity due to stimulus programs aimed at juicing the economic recovery from the coronavirus pandemic.Volkswagen has a new advantage, with Germany spending billions of euros on subsidies that will slash the price of electric cars. The company said this week it will start delivering its ID.3 model in September.
Up next
Another 1.6 million first-time claims for unemployment benefits are expected to have come in last week. That would be the 10th week initial claims have declined since peaking at 6.9 million in the final week of March. Also today:
- The US Producer Price Index for May also arrives at 8:30 a.m. ET.
- Adobe (ADBE) and Lululemon (LULU) report results after US markets close.
Coming tomorrow: The University of Michigan’s latest read on consumer sentiment.
Source: edition.cnn.com
