Market Snapshot: Dow futures retreat as Trump threatens to use troops to end fresh civil unrest

On Monday, the Dow DJIA, +0.36% rose 91.91 points, or 0.4%, to finish at 25,475.02, after trading negative at the start of Monday’s session. The S&P 500 SPX, +0.37% rose 11.42 points, or 0.4%, to end at 3,055.73. The Nasdaq Composite COMP, +0.65% added 62.18 points, or 0.7%, to close at 9,552.05.

What’s driving the market?

“I am dispatching thousands and thousands of heavily armed soldiers,” Trump said late Monday at the White House. “If a city or state refuses to take the actions necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them.”

Major cities from Los Angeles to New York have been engulfed in nightly protests after George Floyd, a black man, died last Monday following a confrontation with police in Minneapolis in which a white police officer, Derek Chauvin, was captured on video driving his knee onto Floyd’s neck until the handcuffed man lost consciousness and later died.

Curfews were announced Monday for Minneapolis and St. Paul and in other cities, while New York’s Gov. Andrew Cuomo placed New York City under curfew Monday night starting at 11 a.m. Eastern and ending at 5 a.m., marking the first such curfew in the city in years.

“Anarchy in the streets threatens to throw a wet blanket on risk recovery as investor optimism over economic reopening in the U.S. could wane,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a Monday research note.

“If American consumers were reluctant to come out of their COVID-19 lockdown cocoon fearing a secondary spreader, it’s unlikely they will feel any safer with military Humvees rolling down Pennsylvania Avenue,” he wrote.

However, investors have mostly dismissed the clashes and focused on efforts by businesses to emerge from lockdown protocols implemented to curtail the spread of COVID-19, even if those reopenings are stymied by looting and vandalism of businesses amid the protests.

Meanwhile, a report from the Congressional Budget Office released Monday said it expected real gross domestic product to be about 3% smaller over the 2020-to-2030 period than it had projected in January, before the pandemic hit the U.S. In inflation-adjusted dollar terms, that drop would be equivalent to $7.9 trillion.

The figures are based on projections released May 19 and the CBO repeated they reflect a “significant markdown” in growth estimates.

GDP isn’t expected to catch up to the previously forecast level until the fourth quarter of 2029, the CBO added.

Investors have also been paying attention to rising Sino-American tensions, with Chinese government officials telling major state-run agricultural companies to pause purchases of some American farm goods, including pork and soybeans, according to reports.

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