The S&P 500 was set to open lower on Wednesday after a strong rebound in the previous session as optimism about an imminent $2 trillion coronavirus package waned, with investors still concerned about the lasting economic hit from the pandemic.
After the White House and Senators agreed on a deal to aid businesses and millions of Americans hit by the health crisis, futures briefly surged but soon reversed course as traders said much of the stimulus had been priced into financial markets.
On Tuesday, the Dow Jones had soared over 11% in its best day since 1933, while the S&P 500 jumped 9.4%, recouping about $1.8 trillion in market value.
“It’s too early to be positive,” said Andrea Cicione, head of strategy at TS Lombard.
“We still haven’t seen evidence that things are improving in terms of contagion (and) also haven’t fully appreciated how far this recession will go.”
The benchmark S&P 500 was still nearly $8 trillion below its mid February high, and investors expect more violent swings. Wall Street’s fear gauge, which nudged lower following reports of the Senate agreeing on the stimulus package, was up 4.3 points at 66.01.
“If the market can’t bounce from these extremely oversold levels, then we are likely headed much lower,” said Adam Sarhan, chief executive officer of 50 Park Investments in Florida .
The Senate will vote on the bill later on Wednesday and the House of Representatives is expected to follow soon after. The total figure at stake exceeds the amount the country spends on national defense, scientific research, highway construction and other discretionary programs combined.
Airlines, hotels and cruise operators, among the hardest hit U.S. sectors, were some of the strongest gainers in premarket trading.
American Airlines, Carnival Corp MGM Resorts and Norwegian Cruise Line Holdings jumped between 8% and 12%.
Boeing Co continued its rally, surging nearly 12% as sources said the planemaker planned to restart 737 MAX production by May, ending a months-long halt triggered by a safety ban.
Nike Inc rose 9% after the sportswear giant beat quarterly revenue estimates and said sales in China were rebounding, helped by online orders.
At 08:27 a.m. EDT, Dow e-minis were down 36 points, or 0.17%, S&P 500 e-minis were down 30 points, or 1.23% and Nasdaq 100 e-minis were down 92.25 points, or 1.22%.