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US Stock Markets Might Crash amid Fears of Another COVID-19 Wave

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  • US stock markets might crash today based on the price action in futures. Fears of a second wave of COVID-19 infections have been spooking investors as the economy reopens.
  • Despite several market participants predicting a crash, equity markets surged in April and May.
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US stock market crash

US stock markets looked strong in April and May even though most pundits predicted a crash. The uptrend continued in June and the S&P 500 (NYSEARCA:SPY) turned positive for the year, while the Nasdaq 100 (NASDAQ:QQQ) made a new all-time high. The surge in US stock markets surprised pundits who predicted a crash. Recently, Paul Tudor Jones and Stanley Druckenmiller admitted that their reading of a US stock market crash didn’t materialize. Druckenmiller said that he was “humbled” by the price action.

Fed and the second wave

Last week, Fed Chair Jerome Powell’s comments on the US economy spooked investors. Notably, investors were betting on a V-shaped recovery. Powell doesn’t expect US employment to revert to pre-pandemic levels anytime soon. After Powell’s comments, US stock markets crashed and had the worst day since April. Now, fears about a second wave of COVID-19 infections spooked investors as states reopen.

US stock market crash today on second wave fears

William Schaffner, a professor at the Vanderbilt University School of Medicine, thinks that “the second wave has begun.” Several observers warned about a second wave of coronavirus infections as economies reopen. Recently, some cases were reported in China as well. China’s economic data released today showed a dip in the country’s retail sales. Somber economic data from China might also be adding to the US stock market crash today.

Looking at futures, the Dow Jones (NYSEARCA:DIA) futures have fallen by over 500 points, while the S&P 500 has fallen 1.8%—below the crucial 3,000 level. As markets rallied, the S&P 500 moved above the 3,000 price level and broke above its 200-day moving average.

If US stock markets crash today as futures indicate, the S&P 500 might fall below its 200-day moving average. Meanwhile, most institutional investors expect equity markets to fall more. Read CFOs Expect a Dow Jones Crash: Is Double-Dip Next? to learn more.

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