(Reuters) – U.S. stock index futures pointed to a strong bounce at the open on Friday, rising 5% on hopes of a U.S. stimulus package to cushion the blow of the coronavirus pandemic, a day after Wall Street racked up its worst losses since “Black Monday” in 1987.
The Dow and S&P 500 indexes sank almost 10% on Thursday, wiping more than $2 trillion off the value of the S&P and plunging global equities into a bear market on fears the world was sliding into recession.
After another sharp selloff in Asia early on Friday, sentiment stabilized as policymakers stepped in to ease a liquidity squeeze and U.S. Democrats and Republicans signalled they could soon agree on support measures.
The market is still down around 25% from mid-February peaks, however, and traders expect more aggressive easing by the Federal Reserve next week following the offer of $1.5 trillion in the form of short-term loans.
“What we’re headed for is a market that should begin to settle down (with) less high volatility percentage declines,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Investors are now expecting the government to get the economic plan in place and get it into law.”
United Airlines (UAL.O) was up 8.6%, a day after losing a quarter of its value as the travel disruptions forced it to draw down $2 billion of existing cash reserves.
At 8:03 a.m. ET, Dow e-minis 1YMcv1 were up 1,110 points, or 5.26%. S&P 500 e-minis EScv1 were up 126 points, or 5.1% and Nasdaq 100 e-minis NQcv1 were up 407.5 points, or 5.65%.
Among individual movers, software company Oracle Corp (ORCL.N) jumped 9.1% after topping quarterly profit and revenue expectations and flagging a “minimal impact” from the virus outbreak on fourth-quarter revenue.
Gap Inc (GPS.N) climbed 6.3% as it forecast 2020 profit above market expectations. It also flagged a $100 million sales hit in Asia and Europe from the coronavirus outbreak.
Additional reporting my Medha Singh in Bengaluru; Writing by Sagarika Jaisinghani; Editing by Sriraj Kalluvila
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