U.S. stock-index futures traded lower Wednesday, suggesting more volatility when trading begins Wednesday, as hopes were dented for a quick round of fiscal stimulus to cushion the U.S. economy against the impact of COVID-19 outbreak.
Losses were cushioned, however, after the Bank of England delivered an emergency interest rate cut which lifted European stocks.
What are the major indexes doing?
Dow Jones Industrial Average futures YMH20, -2.29% fell 573 points, or 2.3%, to 24,276, while S&P 500 futures ESH20, -2.47% gave up 71.80 points, or 2.5%, to 2,794. Nasdaq-100 futures NQH20, -2.18% dropped 189 points, or 2.3%, to 8,141.50 points.
On Tuesday, the Dow Jones Industrial Average DJIA, +4.89% rose 1,167.14 points, or 4.9%, at 25,105.14, while the S&P 500 SPX, +4.94% gained 135.67 points, or 4.9% to close at 2,882.23. The Nasdaq Composite Index COMP, +4.95% jumped 393.58 points, or 5%, to 8,344.25.
That came a day after Monday’s selloff, when stocks fell the most in one day since the 2008 financial crisis.
See: Dow gains nearly 1,200 points after worst day since 2008 crisis
What’s driving the market?
Stocks ended a choppy session Tuesday with gains, with support attributed to President Donald Trump’s call for payroll-tax relief and other measures to help businesses deal with the economic slowdown resulting from the coronavirus epidemic, but lawmakers in both parties expressed skepticism about a payroll-tax cut to bolster the economy leading to loss early Wednesday.
But the Bank of England on Wednesday announced an emergency interest rate cut of half a percentage point to 0.25% and launched a special financing facility to help businesses cope with the effects of the COVID-19 outbreak.
“U.S. futures markets have reacted to this morning’s rebound in Europe, by pulling off their lows a touch but the Dow and S&P 500 are still set to open lower, as doubts grow over the willingness of the U.S. government to act quickly on coronavirus,” said Michael Hewson, chief market analyst at CMC UK, in a note.
Joe Kalish, chief global macro strategist at Ned Davis Research, said a potential payroll-tax cut wouldn’t be sufficient.
“We need to see meaningful support for economic activity and credit backstops, especially for small businesses, not a targeted approach executed only by the executive branch,” he said in a note. “We will likely need congressional involvement. This is a potential solvency problem.”
Markets are also pricing in an easing of monetary policy from the European Central Bank at its Thursday meeting, while the Federal Reserve, which delivered an emergency rate cut last week, is expected to ease further at its regular policy meeting next week.
Read: Why a curiously strong euro is another reason for the ECB to act this week
The U.S. economic calendar, meanwhile, features the February consumer-price index at 8:30 a.m. Eastern. Economists surveyed by MarketWatch expect a flat reading, while the core rate, which excludes volatile food and energy prices, is seen rising 0.2%. Federal budget figures for February are due at 2 p.m. Eastern.
Which companies are in focus?
Shares of Pepsico Inc. PEP, +3.06% fell 1.2% in premarket action after it confirmed it would buy Rockstar Energy Beverage in a $3.85 billion deal.
What are other markets doing?
European equities were higher, with London’s FTSE 100 index UKX, +0.36% up 0.6%, while the pan-European STOXX 600 Europe index SXXP, +0.48% rose 0.8%.
After plummeting 25% Monday, crude oil prices recovered somewhat during Tuesday trading, but edged lower on Wednesday. West Texas Intermediate crude for April delivery CLJ20, -3.17% was off 3% at $33.32 a barrel, while May Brent crude BRNK20, -3.30%, the global benchmark, lost 2.5% to $36.28 a barrel.
Asian markets were led lower by a more than 3% drop for stocks in Australia XJO, -3.60% and South Korea 180721, -2.78%, while Japan’s Nikkei NIK, -2.27% was down nearly 2%.
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