By Peter Nurse
Investing.com - U.S. stocks are set to open with hefty losses Wednesday, giving back Tuesday’s gains, with investors fearful that the proposed virus stimulus package will not be sufficient to assuage severe economic damage from a protracted economic slowdown.
At 7:05 AM ET (1105 GMT), futures for the S&P 500 traded 92 points, or 3.7%, lower, futures for the Nasdaq down 330 points, or 4.5%, while the Dow Jones 30 futures contract fell 833 points, or 4%. These contracts have been stopped limit down, which suggests the cash markets could open with even greater percentage losses.
Wall Street closed with strong gains Tuesday after the Trump administration assembled a $1.2 trillion stimulus plan, that would send cash to Americans within two weeks, and backstop airlines and other companies.
However, to get this deal past skeptical Republican senators, U.S. Treasury Secretary Steven Mnuchin warned that the country’s unemployment rate could hit 20% if they failed to act on this rescue package and there was lasting economic damage.
More and more economists including those from Wall Street’s biggest banks have declared that the outbreak has already triggered a global recession. Goldman Sachs (NYSE:GS) Goldman Sachs, for example, forecast in a note Sunday that the U.S. economy will shrink 5% in the second quarter after a 0% gain in gross domestic product growth in the first three months of the year.
In corporate news, Boeing (NYSE:BA) will be in the spotlight after the aerospace manufacturer called late Tuesday for at least $60 billion in federal aid to help the industry.
Shares in Tesla (NASDAQ:TSLA) fell more than 5% in after-hours trading Tuesday amid suggestions that its factory in Fremont, California may only maintain "minimum basic operations" as law officials declared it a non-essential business in order to slow the spread of the coronavirus.
The economic calendar looks light Wednesday, but eyes will be on the release of the official weekly crude oil inventories, at 10:30 AM ET (1430 GMT), after the American Petroleum Institute estimated on Tuesday a surprise crude oil inventory draw of 421,000 barrels for the week ending March 13.
Oil prices continued to fall Wednesday with U.S. crude futures tumbling to a 17-year low as travel and social lockdowns sparked by the coronavirus epidemic knocked the outlook for demand.
AT 07:10 AM ET (1110 GMT), U.S. crude futures traded 5.6% lower at $25.80 a barrel, having earlier fallen to $25.51, its lowest since May 2003. The international benchmark Brent contract fell 3.5% to $27.74, just off $27.57, its lowest since early 2016.
Additionally, gold futures fell 1.8% to $1,497.70/oz, while the euro traded at $1.0990, down 0.1%.