ASX set to drop as Wall Street falls on vaccine worries

The Dow and the S&P 500 fell on Tuesday (US time) after a four-day winning streak as a pause in Johnson & Johnson’s COVID-19 trial triggered concerns about the timing of a vaccine, although a rally in technology shares supported the Nasdaq.

Johnson & Johnson shed 2 per cent as it said it would take “a few days” to review its halted clinical trial following an unexplained illness in a study participant, possibly delaying results on one of the most closely watched efforts to contain the global pandemic.

Wall Street fell sharply on the back of the announcement from Johnson & Johnson.
Wall Street fell sharply on the back of the announcement from Johnson & Johnson. Credit:AP

In mid-afternoon trade, the Dow Jones is 0.5 per cent lower, the S&P 500 has shed 0.6 per cent and the Nasdaq has slipped by 0.2 per cent. At 5.10am AEDT, futures are pointing to a fall of 58 points, or 0.9 per cent, at the open for the ASX. On Tuesday, the ASX extended its winning streak to seven sessions with a 1 per cent gain.

The S&P healthcare index slipped from a record high hit in the prior session and weighed on broader markets as vaccines are seen critical to stopping the pandemic, which has driven the economy to its worst recession in decades.


Some of the worst-hit companies due to the pandemic – cruise line operators Carnival Corp, Norwegian Cruise Line Holdings and hotel operator Wynn Resorts – fell between 3 per cent and 7 per cent.

The J&J news is “an excruciating reminder of the difficulties that the coronavirus has brought on the economy,” said Eric Schiffer, chief executive officer of private equity firm Patriarch Organisation.

Adding to the negative tone, US House Speaker Nancy Pelosi rejected President Donald Trump’s latest offer on COVID-19 stimulus, the latest sign that a bipartisan deal on coronavirus relief remains unlikely ahead of the November election.

Hopes of more US fiscal aid and a rally in tech heavyweights led stocks higher on Monday, bringing the benchmark S&P 500 and the tech-heavy Nasdaq within 2 per cent of their record highs hit in September after a pullback last month.

Apple is 2.5 per cent lower after holding a virtual event where it unveiled new iPhone models. shares, which have already surged 86 per cent this year, added 1 per cent as the company began 48 hours of promotions as part of “Prime Day” in an early start to the holiday shopping season.

Kicking off third-quarter earnings season, JPMorgan Chase & Co and Citigroup surpassed analyst estimates for quarterly profit on a surge in trading revenue.

However, Citi’s results underscored deeper troubles in its consumer bank that struggled with a decline in customers and spending, sending its shares down 4 per cent. JPMorgan was also down 1.1 per cent, while the S&P 500 bank index shed 2 per cent.

Overall, analysts expect third-quarter earnings for S&P 500 firms to slide 19.6 per cent from a year earlier, smaller than a 31 per cent tumble in the prior quarter.

Boeing dropped 2 per cent as it lost another three orders for its grounded 737 MAX jet in September and delivered half the number of aircraft from the same month a year earlier.

Declining issues outnumbered advancers for a 2.33-to-1 ratio on the NYSE and for a 1.64-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and one new low, while the Nasdaq recorded 94 new highs and eight new lows.


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