Stock futures fell in overnight trading on Tuesday as markets remained very volatile with the government’s response to the coronavirus fallout.
Dow Jones’ industrial average futures were down around 400 points, indicating a 600 point loss at Wednesday’s opening. S&P 500 futures also fell by around 45 points.
The market rebounded from their deepest course since 1987, when investors hoped that the Trump administration’s massive fiscal stimulus plans will save the economy, which is at risk of falling into a recession due to the impact of the coronavirus. .
The White House weighs over $ 1 trillion in a tax package that includes direct payments to Americans and financial breaks for small businesses and the airline industry. Treasury Secretary Steven Mnuchin also said that companies 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 20% if Congress fails to promote the trillion-dollar stimulus package he has proposed, CNBC reported Tuesday evening, citing a source familiar with the matter.
The Dow rose to over 1,000 points on Tuesday to end another unstable session, recovering less than half of Monday’s steep losses. The S&P 500 gained 6%.
Wall Street has been on an unprecedented roller coaster ride amid the coronavirus riot, with the S&P 500 fluctuating 4% or more in both directions for seven consecutive sessions. This surpasses the previous six-day record of November 1929, according to LPL Financial.
On Tuesday, investors also encouraged the Federal Reserve’s intensified efforts to help companies who have difficulty obtaining short-term financing. The bank has announced a special credit line for purchasing corporate card from some issuers. This follows the Fed’s $ 700 billion emergency quantitative easing schedule and a further 100 basis point cut in Sunday’s interest rates.
“The signs indicate that the pandemic will be under control and that the economy will have enough support to resist the storm,” said Brad McMillan, Chief Investment Officer at Commonwealth Financial. “Make no mistake, there will be damage. But from the market point of view, the question will be whether the damage is greater than what the markets now expect or not.”
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