(Reuters) – Wall Street’s main indexes looked set for a bounce on Tuesday, a day after their biggest drop since the 1987 crash, as efforts to contain the rapidly-spreading coronavirus upended parts of the economy and dampened business sentiment.
The Federal Reserve’s severe move to cut interest rates to near zero on Monday sent the benchmark S&P 500 .SPX to late 2018 lows, marking its third-biggest daily percentage drop on record, beaten only by the 1987 rout and the Great Depression crash.
Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas expressed skepticism over the market’s bounce and said that the sentiment still remained weak.
“We have not experienced an issue like this in the last several decades, where it affects all industries and businesses everywhere in the world.”
As governments in the United States and Europe start shutting restaurants and schools, as well as asking people to stay home, several investors are concerned the current crisis could snowball into something bigger than a recession, including a credit crisis or even a depression.
“A recession is a fairly high probability. The question is when does it start,” Frederick said.
Wall Street’s three main indexes have plunged about 30% from their record closing highs in mid February, ending the U.S. stock market’s longest-ever bull run.
At 8:41 a.m. ET, Dow e-minis 1YMcv1 were up 158 points, or 0.77%. S&P 500 e-minis EScv1 were up 20 points, or 0.83% and Nasdaq 100 e-minis NQcv1 were up 90.75 points, or 1.29%.
Big U.S. lenders ticked higher after announcing they would access funding from the Fed’s “discount window”. Bank of America Corp (BAC.N), Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N), JP Morgan Chase & Co (JPM.N), and Wells Fargo & Co (WFC.N) rose between 2.0% and 2.6% in premarket trading.
Boeing Co (BA.N) gained 2.6% after the planemaker said it was in talks with senior White House officials and congressional leaders about short-term assistance for the entire U.S. aviation sector.
Regeneron Pharmaceuticals Inc (REGN.O) jumped 10.5% after the company said it had identified antibodies to potentially treat COVID-19.
China’s JD.com Inc (JD.O) rose 5.6% after the e-commerce company announced up to $2 billion in share buybacks and estimated a growth in sales in the current quarter.
(This story corrects typographical error in first paragraph)
Reporting by Medha Singh and Sanjana Shivdas in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta
Our Standards:The Thomson Reuters Trust Principles.