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Apr 8, 2020

US Market | Futures Indicator Update: Dow futures rise more than 100 points after Tuesday's wild ride

Fred Imbert, Maggie Fitzgerald



U.S. stock futures pointed to a slightly higher open on Wednesday amid hope that the number of new coronavirus cases is starting to decline.
At around 7:35 a.m. ET, Dow Jones Industrial Average futures were 160 points higher, indicating an opening gain of 107 points. S&P 500 and Nasdaq 100 futures also pointed to a higher open.
In the U.S., the number of daily increases in coronavirus cases has fallen since Friday, according to data from Johns Hopkins University. Daily increases in global cases have also fallen since then.
“If the curve is bending, for the first time, some time-line is coming into focus for restarting at least parts of the economy,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “This means investors can start to reduce their best guesses as to how long this recession will last and even if the recession is very deep, if its duration can be shortened and known with some greater clarity, this would tend to raise the value of the stock market.”
Stocks pressured by the coronavirus outbreak rose in the premarket. Carnival, Norwegian Cruise Line and Royal Caribbean all advanced at least 2.7%. MGM Resorts gained 3.8% while Wynn Resorts climbed 2.7%. American led airline stocks higher with a 5.1% jump. United and Delta traded higher by 4.9% and 3.6%, respectively.
However, some investors believe equities were getting ahead of the reality where coronavirus shutdowns are likely to weigh on the economy significantly beyond the second quarter. The major averages have rallied about 20% from their March 23 lows.
The uncertainty around the coronavirus has also pressured corporate earnings estimates. Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, thinks they could fall even more.
“We are still in the early innings of downward EPS revisions,” Calvasina wrote in a note to clients. “Further downward revisions could keep equity market conditions choppy for the time being.”
On Tuesday, the Dow Jones Industrial Average fell 26 points or 0.1%, giving up a 900-point surge from earlier in the day.
The Federal Open Market Committee is set to publish its meeting minutes from its March meeting.  In an emergency decision ahead of that meeting, the Fed cut interest rates to zero, for the first time since the financial crisis.
Although the Fed’s minutes shouldn’t be market moving, investors will get some insight into what the central bank is using as justification for its historic easing measures. 

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