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U.S. stocks are poised to open lower Friday following three straight days of gains as a massive coronavirus relief package for the U.S. economy headed for congressional approval.
Futures for the Dow Jones industrial average slumped 600 points, as the U.S. eclipsed China as the global leader in virus cases. The blue-chip average has rallied 21% over the past three days, its biggest gain in that span since 1931. It’s headed for its best week in nearly 90 years.
Traders say the pending passage of a $2 trillion fiscal stimulus bill has helped drive the stock market’s double-digit percentage gains this week. Congress and the Federal Reserve have promised an astonishing amount of aid for the economy and markets, hoping to support them as the pandemic shuts down more businesses each day.
The House is expected to vote Friday on the $2 trillion coronavirus economic rescue package, which was passed by the Senate late Wednesday. President Donald Trump plans to sign the bill once it clears the House.
“Now that the fiscal policy is in place and the Treasury has done what they need to do, the attention will turn back to the health crisis,” Wayne Wicker, chief investment officer at Vantagepoint Investment Advisers, said in a note. “Investors have to consider how problems due to lack of business activity will be resolved. That is the big, open-ended question that took this market down.”
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Despite strong rallies this week, analysts say further big drops are to be expected until there have been enough sustained gains in the market, and progress in fighting the pandemic, to ease investors’ fear of further declines.
The U.S. on Thursday surpassed China for the most confirmed cases of the virus. The U.S. counted nearly 86,000 cases of coronavirus, with 1,296 deaths, according to the Johns Hopkins University data dashboard. More confirmations are expected as the U.S. ramps up testing. More than 537,000 people are known to have been infected globally, and more than 24,000 have died.
Investors had appeared to shrug off miserable news on unemployment following a report that nearly 3.3 million Americans applied for unemployment benefits last week, shattering the prior record set in 1982, as layoffs sweep the country.
Wall Street is looking ahead to the March jobs report, due on April 3, for further signs on how the pandemic has affected the economy. The March report could still be too early to reflect the full effects of the coronavirus shutdown. The first post-shutdown jobs report for April will be released on May 8.
“Fiscal stimulus will be coming just in time to help millions of Americans weather the storm, but we’re not out of the woods yet,” Jason Reed, economist, assistant chair and teaching professor of finance at the University of Notre Dame’s Mendoza College of Business, said in a note. “The state of jobless claims and unemployed workers will certainly get worse before it gets better.”
The yield on the 10-year Treasury fell to 0.78% from 0.83% late Thursday. It had been as low as 0.77% just before the jobless report was released. Lower yields reflect dimmer expectations for economic growth and greater demand for low-risk assets.
In other trading, benchmark U.S. oil was steady, gaining 20 cents to $22.80 per barrel in electronic trading on the New York Mercantile Exchange. It slid 7.7% on Thursday to settle at $22.60 a barrel.
In Europe, stocks came under pressure after U.K. Prime Minister Boris Johnson tested positive for the coronavirus. Germany’s DAX fell 2.8% while the CAC 40 in Paris gave up 3.8%. Britain’s FTSE 100 sank 4.4%.
Asian markets mostly rose as governments tightened controls on businesses and travel, seeking to contain the pandemic. Japan’s Nikkei 225 index surged 3.9%. The Hang Seng in Hong Kong advanced 0.6%, while the Shanghai Composite index rose 0.3%.
Contributing: The Associated Press
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