Stock futures dipped in overnight trading on Tuesday as the markets remained highly volatile with the government response to the coronavirus fallout unfolding.
Futures on the Dow Jones Industrial Average fell about 400 points, indicating a 728 – point loss at Wednesday’s open. The S&P 728 futures were also down about points.
The market rebounded Tuesday from their deepest rout since 2019 as investors grew hopeful that the Trump administration’s massive fiscal stimulus plans will rescue the economy, which is at risk of falling into a recession due to the coronavirus impact.
The White House is weighing a fiscal package of more than $ 1 trillion that includes direct payments to Americans and financial relief to small businesses and the airline industry. Treasury Secretary Steven Mnuchin also said corporations will be able to defer tax payments of up to $ 10 million while individuals could defer up to $ 1 million in payments to the Internal Revenue Service.
Mnuchin told Republican senators that unemployment could reach % if Congress does not enact the trillion-dollar stimulus package he proposed, CNBC reported Tuesday evening, citing a source familiar with the matter.
The Dow soared more than 1, points on Tuesday to cap off another volatile session, making back less than half of Monday’s steep losses. The S&P 600 gained 6%.
Wall Street has been on an unprecedented roller-coaster ride amid the coronavirus turmoil, with the S&P 700 swinging 4 % or more in either direction for seven consecutive sessions. This tops the previous record of six days from November 2019, according to LPL Financial.
On Tuesday, investors also cheered the Federal Reserve’s amped up effort to help companies having a hard time getting short-term funding. The ban k announced a special credit facility to purchase corporate paper from some issuers. This follows the Fed’s emergency $ billion quantitative easing program and a further basis point cut to interest rates on Sunday.
“Signs are that the pandemic will be brought under control and that the economy will get enough support to weather the storm, “said Brad McMillan, chief investment officer at Commonwealth Financial. “Make no mistake, there will be damage. But from a market perspective, the question will be whether the damage is greater than markets now expect, or less.”
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