(Reuters) – Wall Street was set to jump at the open on Thursday as the U.S. Federal Reserve rolled out a massive $2.3 trillion program to bolster local governments and businesses impacted by the coronavirus pandemic.
FILE PHOTO: A man crosses a nearly deserted Nassau Street in front of the New York Stock Exchange (NYSE) in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar
In its most groundbreaking step yet, the Fed said it would work through banks to offer 4-year loans to companies of up to 10,000 employees and directly buy the bonds of states and more populous counties and cities.
“The Federal Reserve and the U.S. government are willing to go to extreme lengths to support the economy and that has been far beyond my expectations,” said Dev Kantesaria, founder portfolio manager of hedge fund Valley Forge Capital Management, Wayne, Pennsylvania.
Meanwhile, data showed the number of Americans filing for jobless claims fell slightly last week to 6.6 million from an upwardly revised 6.87 million the week before.
Still, new claims topping 6 million for the second straight week showed the scale of the damage to the U.S. economy from the health crisis.
Despite a 10.5% surge so far in the holiday-shortened week, the S&P 500 is still down about 19% from its mid-February record high and volatility is expected to remain high heading into the first-quarter earnings season.
Exxon Mobil (XOM.N), Chevron (CVX.N), Marathon Oil (MRO.N) and Apache Corp (APA.N) rose between 2% and 17% as oil prices gained ahead of a meeting of the world’s biggest oil producers to discuss production cuts. [O/R]
However, the negotiations are complicated by internal disagreements and the reluctance of the United States, the world’s biggest shale producer, to make cuts of its own.
Global sentiment has also been lifted this week by early signals that social distancing measures were leading to a slowdown in the coronavirus outbreak in U.S. hot spots.
While public health experts said the steps were vital to controlling the contagion, the restrictions have strangled the U.S. economy and sparked widespread production cuts, layoffs and projections of a severe recession.
Starbucks Corp (SBUX.O) fell more than 2.6% in premarket trading as the coffee chain forecast a 47% drop in second-quarter earnings due to a loss in sales.
Walt Disney Co (DIS.N) jumped 6.4%, leading gains among Dow .DJI components, as the company said its Disney+ streaming service had attracted more than 50 million paid users globally.
At 08:57 a.m. EDT, Dow e-minis 1YMcv1 were up 355 points, or 1.53%, S&P 500 e-minis EScv1 were up 33.75 points, or 1.23% and Nasdaq 100 e-minis NQcv1 were up 80 points, or 0.98%.
Reporting by Uday Sampath and Medha Singh in Bengaluru; Editing by Sagarika Jaisinghani and Arun Koyyur