Wall Street heads for lower open after three-day surge as virus fears grow - Investing.com

© Reuters. Traders work on the floor of the NYSE in New York

By Uday Sampath Kumar and Medha Singh

(Reuters) - U.S. stock indexes were set to fall sharply at the open on Friday, following the S&P 500 and the Dow's best three-day run in nearly a century, as fears about the economic damage from the rapidly spreading coronavirus returned to the forefront.

Despite a shaky start to the week, all three major indexes surged between 13.3% and 17.6% until Thursday's close, powered by the Federal Reserve's unprecedented policy easing and hopes of a $2.2 trillion government stimulus aid bill.

The U.S. House of Representatives is due to begin a debate on the proposal at 9 a.m. ET (1300 GMT), aimed at flooding the country with cash in a bid to counter the economic impact of the outbreak.

The Dow Jones Industrial Average () is now up more than 20% from its intra-day low this week, technically establishing a bull market.

But with the S&P 500 () still down more than 20% - or about $6 trillion in value - from its mid-February record highs, traders said the rebound was unlikely to last without evidence that the virus was being contained.

"We're not out of the woods yet on the health or economic crisis," said Eddie Perkin, chief equity investment officer at Eaton (NYSE:) Vance in Boston.

"It would seem odd to me if the markets fully stabilize before we get more clarity on the health front."

The United States on Thursday surpassed China as the country with the most number of coronavirus cases and is expected to become the epicenter of the pandemic. British Prime Minister Boris Johnson tested positive for the virus, he said on Friday.

A record 3 million surge in U.S. weekly jobless claims offered the first glimpse of the extent of the economic damage from the outbreak, which has forced several companies to shutter stores and announce layoffs.

"Big questions are starting to be answered, like how bad spread of infections (and) how bad is the economic damage," said Neil Wilson, chief market analyst for Markets.com in London.

"That is a recovery narrative, not panic, but if a recovery is not as swift as hoped, equity markets will suffer another hit."

The rebound in equities this week was led by sectors that were among the worst hit in the month-long rout, including airlines and cruise liners.

Big U.S. lenders Bank of America Corp (N:), Citigroup Inc (N:) and JPMorgan Chase & Co (N:) fell more than 3% in premarket trading, after the banking index .SPXBK> clawed back nearly a third of its value this week.

Boeing Co (N:) slipped 3.2% but was still set for it best weekly gains with a whopping 90% increase.

Oil majors Exxon Mobil (N:) and Chevron Corp (N:) fell 3%, tracking a drop in Brent crude () prices.

At 8:50 a.m. ET, 1YMcv1> were down 686 points, or 3.07%. S&P 500 e-minis were down 75.5 points, or 2.89% and were down 192.25 points, or 2.45%.

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2020-03-27 13:26:19Z
CBMie2h0dHBzOi8vd3d3LmludmVzdGluZy5jb20vbmV3cy9zdG9jay1tYXJrZXQtbmV3cy9mdXR1cmVzLWZhbGwtYWZ0ZXItc3Ryb25nLXRocmVlZGF5LXJhbGx5LWFzLXZpcnVzLXRocmVhdC1jb250aW51ZXMtMjEyMzI4M9IBAA