Stock futures and premarket trading in exchange-traded funds pointed to a bounce on Tuesday following the Dow Jones Industrial average’s third-worst day ever.
Trading overnight, however, was very volatile with futures giving back more than 1,000 points as investors try to weigh the uncertain economic impact of the coronavirus outbreak.
Earlier in the session, futures contracts tied to the S&P 500, Dow Jones Industrial Average and Nasdaq 100 hit their upside limit, triggering an upside halt. In non-U.S. trading hours, stock futures are halted if they hit their downside or upside limits, pinning those contracts to their upper or lower bounds. The halt is meant to ensure that trading is orderly and not emotional.
Overnight futures are the latest market to see eye-popping volatility as computer trading runs wild on Wall Street during the coronavirus market collapse.
Those wild moves came after President Donald Trump tweeted: “The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!”
The Dow Jones Industrial Average and S&P 500 had their worst day since the “Black Monday” crash of 1987, falling 12.9% and 12%, respectively. It was also the Dow’s third-worst day ever. The Nasdaq Composite had its biggest one-day plunge ever, tumbling 12.3%.
Trading halts typically occur amid extremely abnormal market volatility.
Wall Street’s drop on Monday came even after the Federal Reserve slashed interest rates to near-zero on Sunday and announced a $750 billion asset-purchasing program. It also came as the number of coronavirus cases jumped in the U.S.Â
Futures contracts tied to the major U.S. equity indexes rose around 6:30 a.m. ET on Tuesday after Politico reported that Treasury Secretary Steven Mnuchin will ask congressional lawmakers for aÂ stimulusÂ package ofÂ $850 billion or more to help the U.S. economy grapple with the impact of the coronavirus.
At least 4,281 cases have been confirmed in the U.S. along with more than 70 deaths, according to data from Johns Hopkins University. President Donald Trump also said the crisis could stretch into August, adding the administration may look at locking down “certain areas.”
“Although the contemporary crisis is loaded with bad news, this has not been its primary problem. It’s the ‘unknown,'” said Jim Paulsen, chief investment strategist at The Leuthold Group, in a note. “Not even health experts understand what this is or where it is headed, and that is the worst possible outcome for investors.”
“Give me bad news any day over complete uncertainty,” he said.
Biotech giantÂ Regeneron, meanwhile, said Tuesday morning that it’s aiming toÂ have doses of a potential drug for COVID-19 ready to start human clinical trials by early summer. The announcement, which represents a marked acceleration in the company’s drug timeline, sparked a 10% rally in the company’s equity in premarket trading.
The S&P 500 closed Monday at its lowest level since December 2018. The Dow ended the session at its levels not seen since early 2017.
“For now until there is improvement in the trend â¦ it’s tough to consider being long and it’s right to be in cash on the sidelines,” Mark Newton, managing member at Newton Advisors, said in a note to clients.
âCNBC’s Thomas Franck and Eustance Huang contributed to this report.
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