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Wall St eyes lower open as China COVID cases rise; Disney jumps

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2022-11-21T13:52:25Z

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo

Wall Street’s main indexes were set to open lower on Monday as COVID-19 flare ups in China reignited concerns about slowing growth, while Disney shares jumped as investors cheered Bob Iger’s surprise comeback as chief executive.

Beijing warned it was facing its most severe test of the pandemic, shutting businesses and schools in hard-hit districts and tightening rules for entering the city as infections ticked higher in the capital and nationally.

“You’ve got a real concern about the Chinese economy’s drag on U.S. economic activity,” said Hugh Johnson, chief economist of Hugh Johnson Economics in Albany, New York.

U.S. casino operators with businesses in China including Wynn Resorts Ltd (WYNN.O), Las Vegas Sands Corp (LVS.N), MGM Resorts International (MGM.N) and Melco Resorts & Entertainment Ltd slipped between 3.3% and 5.8% in premarket trading.

Travel stocks including American Airlines Group Inc (AAL.O) and Norwegian Cruise Line Holdings Ltd (NCLH.N) fell 0.7% and 1.2%, respectively.

Still, a 9.7% jump in Walt Disney Co (DIS.N) was set to limit declines on the Dow Jones Industrial Average (.DJI) after Bob Iger’s return as chief executive to the entertainment giant.

At 8:11 a.m. ET, Dow e-minis were down 42 points, or 0.12%, S&P 500 e-minis were down 16.25 points, or 0.41%, and Nasdaq 100 e-minis were down 68.5 points, or 0.59%.

U.S.-listed Chinese stocks including Alibaba Group Holding Ltd , Pinduoduo Inc (PDD.O), JD.com Inc and Bilibili Inc dropped between 2.4% and 5.2%, with the latest wave of COVID-19 cases testing China’s resolve to stick to adjustments it has made to its zero-COVID policy.

Focus was also on the release of minutes from the U.S. Federal Reserve’s November meeting on Wednesday after some officials reiterated the central bank’s pledge to continue monetary policy tightening until inflation was in check.

Fed’s Boston chief Susan Collins said on Friday the central bank may need to deliver another 75-basis point rate hike as it seeks to get inflation under control.

“The question is 50 basis points or 75 basis points,” Johnson said.

While traders are widely betting on a 50-basis point hike in the December meeting, some see 24.2% odds of a 75-bps hike, according to CME Group’s FedWatch tool.

Trading volumes are likely to be thin this week as markets will be closed on Thursday for Thanksgiving and will be open for half day on Friday.

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