Futures surge on early signs of coronavirus slowdown in hot spots

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(Reuters) – U.S. stock index futures bounced for a second straight day on Tuesday as risk appetite returned on tentative signs that the coronavirus outbreak was starting to plateau in hard-hit U.S. states.

All three major indexes rallied more than 7% on Monday after the governors of New York and New Jersey said their states, hot spots of the COVID-19 disease, were showing early signs of a “flattening” of the outbreak.

But they warned against complacency as the nationwide death toll approached 11,000 and global infections surged past 1.3 million.

“Even if we have reached the peak, the lockdowns around the globe may be extended for a while more as governments may want to ensure that the virus has indeed been contained,” said Charalambos Pissouros, senior market analyst at JFD Group.

“We believe that the global economy may start recovering well after the peak of the pandemic.”

A Reuters poll of economists said a global recession would be deeper than previously thought, although most clung to hopes for a swift rebound.

Exxon Mobil (N:XOM), Marathon Oil (N:MRO) and Apache Corp (N:APA) rose between 4% and 10% in premarket trading as oil prices rallied amid hopes the world’s main oil producers including Saudi Arabia and Russia would agree to cut output at a meeting on Thursday.

Despite Monday’s bounce, which marked the biggest daily percentage rise for each index since March 24, the S&P 500 (SPX) remains more than 21% below its mid-February record closing high.

Wall Street’s fear gauge (VIX) has steadily retreated from 12-year peaks, but volatility is expected to remain high as companies prepare to report first-quarter earnings and outline plans to bolster cash reserves to ride out the economic slump.

Oilfield services firm Halliburton Co (N:HAL) jumped 7.3% after saying it was cutting about 350 jobs in Oklahoma and that its executives would reduce their salaries.

S&P 500 companies are expected to enter an earnings recession in 2020, with profit declines in the first and second quarters, according to IBES data from Refinitiv.

At 06:09 a.m. ET, Dow e-minis <1YMcv1> were up 791 points, or 3.52%, S&P 500 e-minis were up 82.25 points, or 3.11% and Nasdaq 100 e-minis were up 217 points, or 2.7%.

SPDR S&P 500 ETFs (P:SPY) were up 3%.