Stock futures seesawed in early Wednesday morning trading, following Tuesday’s historic rally, as investors awaited an unprecedented stimulus package to combat the economic impact of the coronavirus.
As of around 1:21 a.m. ET, futures on the Dow Jones Industrial Average fell 221 points, pointing to a decline of around 198 points at the Wednesday open. S&P 500 futures and Nasdaq-100 futures also pointed to declines for the two indexes at the open on Wednesday.
Futures briefly turned positive after multiple reports that White House officials reached a deal with Senate leaders on a massive stimulus bill intended to cushion the economic blow of the coronavirus outbreak.
“We have a deal,” White House official Eric Ueland told reporters, according to Reuters.
The action in the futures market followed an epic comeback on Wall Street. The Dow soared more than 2,100 points, or more than 11%, notching its biggest one-day percentage gain since 1933 and its best point increase ever. The S&P 500 rallied 9.4% for its best day since October 2008.
Even with Tuesday’s massive rebound, some on Wall Street struggle to see the light at the end of the tunnel, especially without a clear sign that the coronavirus outbreak will be contained soon.
“This was a one-day bull market,” CNBC’s Jim Cramer said on “Closing Bell” on Tuesday. “You had stocks that moved so much they basically moved as if the second half of the year is going to be good. I struggle to find out why the second half of the year should be good …I hate this kind of rally. This was a machine driven rally, just like the sell-offs … I want to wait to see.”
Last week, the Cboe Volatility Index (VIX), also known as Wall Street’s fear gauge, eclipsed its financial crisis high and closed at 82.69.
While the VIX was in the 60 range on Tuesday, that level is about three times the long-term average for the indicator at “around 20,” Tim Edwards, managing director of index investment strategy at S&P Dow Jones Indices, told CNBC’s “Squawk Box Asia” on Wednesday morning Singapore time.
3%, 4% move is the new normal, at least for the short-term, for the S&P 500
managing director of index investment strategy, S&P Dow Jones Indices
“On average the S&P 500, super long time, moves up or down by about 1% every day. You can expect to see around three times that,” Edwards said. “3%, 4% move is the new normal, at least for the short-term, for the S&P 500.”
Investors also continued to monitor headlines about lawmakers closing in on a massive fiscal stimulus bill worth $2 trillion to blunt the economic damage from the pandemic.
But talks could stretch into Wednesday morning as the two parties continued to work through the text and hash out final details.
On Tuesday morning, House Speaker Nancy Pelosi told CNBC on that there is “real optimism” Congress can clinch a pact within a few hours. Senate Majority Leader Mitch McConnell later said the bill is at the “five-yard line.”
Meanwhile, the coronavirus cases in the U.S. and globally still haven’t shown a sign of peaking. More than 400,000 cases have been confirmed worldwide, including over 50,000 in the U.S., according to Johns Hopkins University. So far, more than 600 deaths related to the coronavirus have been confirmed in the U.S. New York City reported nearly 15,000 cases Tuesday and 131 related deaths.
— CNBC’s Jesse Pound contributed reporting.
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