Stock futures were flat in overnight trading following a big rally in the previous session fueled by optimism that the coronavirus outbreak is improving in the U.S.
Dow futures rose 0.25%, indicating a gain of 13 points. The S&P 500 and Nasdaq were set to open slightly lower.
Signs that the coronavirus pandemic is easing drove stocks higher on Tuesday, even as the first batch of quarterly earnings showed the outbreak is taking a toll on corporate profits. The Dow climbed about 560 points, helped by Johnson & Johnson, Microsoft and Apple which rose 4.5%, 4.9% and 5%, respectively. The S&P 500 also registered a significant gain, rising more than 3%.
The tech heavy Nasdaq Composite rose 4%, led by Amazon, which notched an all-time high as investors bet on increased demand amid the nationwide shutdown. The Nasdaq is less than 14% from its 52- week high on February 19.
“The bending of the virus curve simultaneously across this country and around the globe has brought widespread and serious national conversations about restarting the economy,” Leuthold Group’s chief investment strategist Jim Paulsen told CNBC. “For a crisis whose primary tagline for investors was ‘that is completely unknown,’ this is perhaps the first time there is some semblance of clarity as to a timeline for the end of this sad situation.”
New York Gov. Andrew Cuomo’s optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States, also boosted investor sentiment. He said Tuesday deaths related to the virus in the state are leveling off.
Still, the dismal earnings ahead from U.S. companies grappling with the coronavirus shutdown could spook investors. Analysts expect S&P 500 earnings growth to decline 10.2% in the first quarter year-over-year, according to Refinitiv.
Generally, bank earnings came in well below expectations on Tuesday due to the economic impact of the coronavirus. However, JPMorgan’s trading division also posted a 32% increase in revenue to a record $7.2 billion.
Bank earnings continue on Wednesday with Citigroup, Bank of America and Goldman Sachs reporting before the bell. Healthcare giant UnitedHealth and Bed Bath & Beyond also report quarterly earnings on Wednesday.
For the first quarter, 88 negative earnings pre-announcements have been issued by S&P 500 corporations, according to Refinitiv. A wave of major companies have already withdrawn their full-year guidance.
Retail sales for March are expected to crater 8%, according to Dow Jones, and will be released at 8:30 am ET on Wednesday.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.