Stocks set to surge following worst day since the 87 crash, S&P 500 futures hit limit up

U.S. stock futures surged in volatile trading on Friday as Wall Street tried to recoup some of the sharp losses suffered in the previous session, which was the worst since the “Black Monday” market crash in 1987.

S&P 500 futures jumped more than 5% to reach their so-called “limit up” level. These limit levels act as a ceiling for buying until regular trading begins and are meant to insure orderly trading. Dow Jones Industrial Average futures were up more than 1,000 points, implying a gain of nearly 1,000 points. Nasdaq 100 futures also surged. 

Apple shares jumped nearly 5% in the premarket after an analyst at Wells Fargo upgraded the tech giant to overweight from equal weight, citing a “compelling risk/reward” outlook. 

Futures got a boost in part after House Speaker Nancy Pelosi said U.S. lawmakers and the White House were close to a deal on economic relief amid the coronavirus outbreak. “We’ve resolved most of our differences,” Pelosi told reporters Thursday evening, noting it’s about “testing testing testing.”

Earlier in after-hours trading, Dow futures had indicated an opening loss of 700 points.

The overnight action followed the official end of the record-long bull market run. The S&P 500 plummeted 9.5% in its worst day in more than three decades Thursday, joining the Dow in a bear market, or more than 20% from its recent peak. The Dow also suffered its worst point drop ever and the biggest percentage decline since 1987.

The market’s historic drop on Thursday indicated that investors believe the government’s fiscal plans and the Federal Reserve’s ramped-up funding actions wouldn’t be sufficient to offset the economic impact from the coronavirus.

“I would advocate for pushing money into the hands of companies right now, and into the hands of individuals … and individual consumers because that is really the only thing … that is gonna help at this point,” David Riedel, president and founder of Riedel Research Group, told CNBC’s “Squawk Box Asia” on Friday morning Singapore time.

“When they’re ready to spend, then that V (shaped recovery) … can take hold and things can start to recover quickly,” he said.

Stocks briefly cut losses Thursday after the Fed said it would conduct three repo operations as part of a stepped-up program to help keep liquidity flowing. The central bank added more than $198 billion to the financial system in a combination of overnight and longer-term offerings. But the market ended up closing at session lows.

Investors were also bombarded with a slew of negative headlines about the fast-spreading coronavirus.  The NCAA has canceled its March Madness basketball tournaments, a day after the National Basketball Association suspended the remainder of its season indefinitely. New York City Mayor Bill de Blasio declared a state of emergency, while new restrictions for large events and businesses were imposed.

“There are no guarantees here, and things could get worse,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “If the number of cases continues to increase, the economic damage will go from hitting confidence to something worse. If the economy deteriorates, markets will reflect that shift.”

Meanwhile, the White House’s response to the coronavirus outbreak disappointed the market. President Donald Trump announced travel from Europe will be suspended for 30 days, and added the administration would provide financial relief for workers who are ill or quarantined. 

Traders awaited more action by government officials heading into the weekend.

Thursday’s rout also marked the second time this week that a market-wide circuit breaker was triggered to prevent stocks from a free-fall. Trading was halted for 15 minutes shortly after the open after an initial 7% drop in the S&P 500.

“These are no doubt jarring times — investors should take this time to review their portfolio and make sure they’re comfortable with their level of risk,” said Mike Loewengart, managing director of investment strategy at E-Trade.

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Source: https://www.cnbc.com/2020/03/12/futures-stock-market-coronavirus-concerns.html

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