(Reuters) – U.S. stock index futures fell over 2% on Friday, a day after the S&P 500 and the Dow posted their best three-day run since the early 1930s, as the United States faced the prospect of becoming the next global epicenter of the coronavirus pandemic.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson
Despite a jittery start to the week, all three major indexes have so far jumped between 13.3% and 17.6%, powered by unprecedented policy easing by the U.S. Federal Reserve and hopes of a $2.2 trillion government stimulus aid bill.
The U.S. House of Representatives is expected to debate on the proposal, aimed at flooding the country with cash in a bid to counter the economic impact of the outbreak, later on Friday.
The Dow Jones Industrial Average .DJI is now up more than 20% from its intra-day low this week, technically establishing a bull market.
But with both the Dow and the S&P 500 .SPX still down over 20% from their mid-February record highs, traders said the rebound was unlikely to last without evidence that the virus was being contained.
“Gains in equities this week do not truly reflect market confidence that the coronavirus outbreak has peaked and that the economic turmoil is over,” said Han Tan, market analyst at FXTM in Kuala Lumpur.
The United States on Thursday surpassed China as the country with the most coronavirus cases, with nearly 85,000 infections and 1,259 deaths, and is expected to become the epicenter of the pandemic, according to the World Health Organization.
A record 3 million surge in U.S. weekly jobless claims offered the first glimpse of the extent of the economic damage from the outbreak, which has forced several companies to shutter stores and announce layoffs.
“Big questions are starting to be answered, like how bad is the spread of infections (and) how bad is the economic damage,” said Neil Wilson, chief market analyst for Markets.com in London.
“That is a recovery narrative, not panic, but if recovery is not as swift as hoped, equity markets will suffer another hit.”
Oil majors Exxon Mobil (XOM.N) and Chevron Corp (CVX.N) fell 3% premarket, tracking a drop Brent crude LCOc1 prices.
Boeing Co (BA.N) slipped 4% and was the top percentage decliner among Dow components, but was still set for it best weekly gains with a whopping 90% increase.
At 07:01 a.m. EDT, Dow e-minis 1YMcv1 were down 560 points, or 2.51%, S&P 500 e-minis EScv1 were down 63.25 points, or 2.43% and Nasdaq 100 e-minis NQcv1 were down 171 points, or 2.18%.
Reporting by Uday Sampath and Medha Singh in Bengaluru; Editing by Shounak Dasgupta, Sagarika Jaisinghani and Saumyadeb Chakrabarty