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Stock futures indicate another day of declines on Wall Street

by drbyos

A man wearing a mask walks at the New York Stock Exchange (NYSE) on March 17, 2020 on Wall Street in New York City.

Johannes Eisele | AFP | Getty Images

Forward contracts linked to major US stock indices fell early Thursday morning, signaling another day of declines for Wall Street.

As of 2:07 ET, Dow Jones Industrial Average futures were 410 points lower, implying an initial drop of 306.92 points. The S&P 500 and Nasdaq futures also indicated lower openings for the two indices, although trading in futures contracts may change rapidly overnight.

The moves followed another violent day on Wall Street on Wednesday, when investors returned to pessimism after Tuesday’s 6% rebound.

The Dow lost 1,338.46 points, or 6.3%, on Wednesday and closed its first close below 20,000 since February 2017. The Dow dropped more than 2,300 points to the session lows. The S&P 500 index fell 5.2% to 2,398.10 and closed nearly 30% below a record set last month as both indices further declined in the bear markets.

A dizzying spike in Treasury yields has also made investors anxious. The 10-year Treasury rate rose 22 basis points to 1.18% on Wednesday, after an increase of over 30 basis points on Tuesday as it picks up from record lows.

Early Wednesday evening, futures rose higher after the ECB announced a new pandemic emergency purchase program that will use € 750 billion ($ 819 billion) to buy stocks to support the European economy. The central bank said that the purchases will be conducted through the end of 2020 and will include a variety of assets including public debt.

“The ECB will ensure that all sectors of the economy can benefit from supportive financing conditions that allow them to absorb this shock,” the central bank said in a statement. “This also applies to households, businesses, banks and governments. The Governing Council will do everything necessary within its mandate.”

The ECB’s action follows similar initiatives by the Fed, its US counterpart. The Fed announced earlier this month that it plans to pump an additional $ 1 trillion into the U.S. economy through asset purchases and reduce the federal funds rate to zero.

The spread of the coronavirus also led to the New York Stock Exchange announcing Wednesday that it will temporarily close its historic trading platform and switch completely to electronic commerce. The exchange said two people tested positive for the disease on screenings conducted this week.

All-electronic trading will begin outdoors on March 23, the exchange said.

Expressing investors’ fears about the virus, longtime hedge fund Bill Ackman joined CNBC on Wednesday to warn that the new coronavirus will cause destruction in the financial markets and the US economy without unprecedented action from part of the federal government.

Ackman and dozens of other economists and investors fear that the virus and efforts to prevent its spread could undermine U.S. production, exports and ultimately GDP growth.

The Pershing Square executive called on President Donald Trump to begin a “Spring Break” in the United States for a month and to suspend all interest, royalty and tax payments for the duration.

“We have to close it now … This is the only answer,” said the billionaire investor. “America will end as we know it. I’m sorry to say it, unless we take this option.”

Shares moved down towards the end of Wednesday’s session, however, after the Senate had enough votes to pass a bill that expands the paid allowances and unemployment benefits in response to the virus as part of that which should be a huge government response to avoid a recession.

Senate majority leader Mitch McConnell said Wednesday that he will vote for the plan despite what he has called “real shortcomings”. With the urgent need for action “I don’t think we should let perfection be the enemy of something that can help even a subset of workers,” he said.

The White House weighs a tax package of over $ 1 trillion that includes direct payments to Americans and financial relief for small businesses and the airline industry.

Wall Street has been on an unprecedented roller coaster ride amid the coronavirus riot, with the S&P 500 swinging 4% or more in both directions for eight consecutive sessions.

– Eustance Huang and Christine Wang of CNBC contributed to this report.

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