Fauci warns against reopening the economy too fast
U.S. stock futures were pointing to slight gains ahead of the market open on Wednesday after top infectious disease expert Dr. Anthony Fauci warned lawmakers that a premature lifting social and economic restrictions could lead to further outbreaks of COVID-19 in the country.
Appearing before a Senate hearing on Tuesday, Fauci said the U.S. does not have the necessary testing and surveillance infrastructure needed to prepare for a fall resurgence of the coronavirus, a second wave that is “entirely conceivable and possible.”
Fauci told senators that the “consequences could be really serious” if states don’t reopen based on the guidelines set out by the White House.
“If some areas, cities, states or what have you, jump over those various checkpoints and prematurely open up, without having the capability of being able to respond effectively and efficiently, my concern is we will start to see little spikes that will turn into outbreaks,” he said
Concerns over a resurgence in COVID-19 infections in China, Germany and South have also ignited fears of a fresh wave in countries that had started to take measures to reopen.
By 5:30 a.m. ET, futures tied to the Dow were up 67 points, or 0.28% to 23,641. The tech-heavy Nasdaq 100 futures indicated a gain of 25.75 points, or 0.28% to 9,104 while the S&P 500 futures were little changed.
Traders await Powell speech
Meanwhile, traders will be keenly watching a speech by Federal Reserve boss Jerome Powell at 9:00 a.m. ET for clarity on the state of the U.S. economy. Powell will speak live via webcast hosted by the Peterson Institute for International Economics.
His speech will be scrutinized amid rising bets that the U.S. might adopt negative interest rates for the first time to shield the economy from the COVID-19 pandemic.
On Tuesday, President Donald Trump once again floated the idea of negative interest rates, saying the U.S. should join other countries that already have them.
But Powell and his colleagues have repeatedly pushed back on negative rates and insisted the Fed would continue to use other monetary tools at its disposal to shield the economy.
Tesla given go-ahead to resume operations at its Fremont plant
In other news, Alameda County officials say Tesla (NASDAQ: TSLA) can resume activities at its Fremont facility from May 18 if additional safety measures are in place and are properly implemented.
“If Tesla’s Prevention and Control Plan includes these updates, and the public health indicators remain stable or improve, we have agreed that Tesla can begin to augment their Minimum Business Operations this week in preparation for possible reopening as soon as next week,” Alameda County Public Health Department tweeted early Wednesday.
Tesla CEO Elon Musk reopened the plant beyond basic operations on Monday, despite a stay-at-home order to prevent the spread of COVID-19. The plant employs about 10,000 workers and had been shut since March 23.
It is not clear whether the authorities would punish the electric-car maker for violating the order. Tesla shares were up nearly 2% to $825.4 in premarket trade Wednesday.
Uber reportedly turns down all-stock offer to acquire GrubHub
CNBC’s David Faber reported late Tuesday that Uber (NYSE: UBER) has rejected an all-stock proposal to buy food delivery company Grubhub (NYSE: GRUB) for 2.15 Uber shares per share of Grubhub.
Just yesterday, the Wall Street Journal reported that Uber had made an offer to acquire Grubhub. A report on Bloomberg also said that a deal between the companies could be sealed this month.
Faber, however, says the two companies have failed to agree on a price despite having been in discussions for about a year.
“We are constantly looking at ways to provide more value to our customers, across all of the businesses we operate. We have shown ourselves to be disciplined with capital and we do not respond to speculative M&A premiums,” Uber said in a statement to CNBC.
Acquiring Grubhub would give Uber control of the U.S. food delivery industry and move closer to finally making a profit. However, such a deal is likely to face significant antitrust headwinds from regulators.
