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Contracts on the S&P 500, Dow and Nasdaq kicked off the overnight session sharply lower before turning positive, suggesting the market carnage from Monday may partially rebound.
[Read more: Oil crashes, stocks crater on coronavirus, crude war fears]
Futures on the S&P 500 and Dow each rose more than 0.8% Monday.
This came after stocks on Monday posted their largest one-day percent declines since late 2008, with each of the S&P 500 (^GSPC), Dow (^DJI) and Nasdaq (^IXIC) off more than 7%. The drubbing – spurred as fears over the coronavirus outbreak compounded with panic over a price war in oil markets – erased more than $1.87 trillion from the S&P 500’s market value in the one-day period alone.
Monday’s stunning losses came as panic flared over an oil price war between Saudi Arabia and Russia. These fears added to the central concern over the spread of COVID-19 and the economic fall-out that could result. The World Health Organization’s director-general Tedros Adhanom Ghebreyesus said during a briefing Monday that the “threat of a pandemic [had] become very real,” with the total number of cases topping 109,000 and the death toll breaching 3,800 on Monday.
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As the case count continues to rise, countries have individually ramped up measures to try and stem the spread of the virus. Italy, the country with the highest coronavirus death toll outside of China, Monday night extended a lockdown and travel restrictions to residents across the entire country, after initially enforcing these measures just for regions in its north.
With concerns about the coronavirus outbreak compounding with precipitous declines in oil prices and Treasury yields, investors have increasingly bet on further stimulus from global policymakers.
As of Monday evening, markets priced in a near 50% probability that the Federal Reserve would step in with a cumulative 100 basis points of rate cuts by the end of their April policy-setting meeting, bringing the lower band on benchmark interest rates down to zero from 1% currently, according to CME Group data.
“After last week’s rate cut, we said the odds that the Fed would cut rates to zero had risen to around 50%,” JPMorgan economist Michael Feroli wrote in a note Monday. “We believe the news flow has worsened since then: Our global colleagues have marked down growth estimates further—particularly in Europe—an increasing number of domestic activities are being cancelled, and the collapse in energy prices could deliver acute pain to certain regional U.S. economies.”
“In this environment we see no good reason for the Fed to ‘keep its powder dry,’ but instead now believe it will cut the interest on excess reserve (IOER) rate to zero at or before the March 18th meeting,” he said, referring to the amount paid to commercial banks to keep their funds with the Fed.
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7:27 p.m. ET: Stock futures rise
- S&P 500 futures (ES=F): +23.50 points (+0.86%) to 2,771.25
- Dow futures (YM=F): +199 points (+0.83%) to 24,076.00
- Crude oil (CL=F): +2.73% to $31.98 a barrel
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6:39 p.m. ET: Stock futures fall as overnight session kicks off
Stock futures began the overnight session lower, extending losses from Monday.
Here were the main moves in markets, as of 6:39 p.m. ET:
- S&P 500 futures (ES=F): 2,725.25, down 22.5 points or -0.82%
- Dow futures (YM=F): 23,635.00, down 242 points or -1.01%
- Nasdaq futures (NQ=F): 7,901.25, down 50.25 points or -0.63%
- Crude oil (CL=F): $31.17 per barrel, down 0.03%
- Gold (GC=F): $1,675.40 per ounce, up $0.30 or +0.02%
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