U.S. stock futures pointed to strong gains at the open on Wednesday, following recent weakness in markets aggravated by oil’s massive decline as crude prices attempted to stabilize in early trading.
Dow Jones Industrial Average futures rose 350 points, or 1.5%. Futures for the S&P 500 and Nasdaq-100 also pointed to strong gains at the open.
The West Texas Intermediate contract for June was up 12.3%, trading at $12.99 per barrel, after an earlier decline. Brent futures, meanwhile, were up 5.9% at $20.48 per barrel, recovering from a sharp overnight drop.
A slew of companies also got a lift from solid earnings results, giving the broader market a boost. Chipotle Mexican Grill posted a better-than-expected profit, sending its stock up more than 6% in the premarket. Kimberly-Clark and Snap gained 1.1% and 19.6%, respectively, after both companies released their latest quarterly results.
Helping sentiment, Senate Republicans and Democrats on Tuesday passed a $484 billion coronavirus relief package that focused on small businesses, hospitals, and testing. The House could approve the bill as early as Thursday.
On Tuesday, the Dow Jones Industrial Average lost about 630 points, bringing its weekly decline to more than 1,000 points. The 30-stock index was dragged down by Merck, which lost 5.5%, and Boeing, which fell more than 5%.
The S&P 500 also experienced sharp declines, falling more than 3%. The tech-heavy Nasdaq Composite dropped about 3.5%, its worst daily performance since April 1.
The market’s sell-off this week came beside massive losses in the oil market due to the evaporation of demand. Oil prices are tanking and spreading to more futures contracts, worrying investors about the deep economic damage being done by the coronavirus shutdowns.
“This week investors are realizing that even though the crisis could soon get better, the negative impacts of having an economy which is essentially shut down are magnifying at an alarming rate. With no demand even for a couple of months, energy prices go negative as excess oil supplies balloon,” Jim Paulsen, chief investment strategist at the Leuthold Group told CNBC.
The June contract for West Texas Intermediate, which is the more actively traded contract and therefore a better indication of how Wall Street views the price of oil, settled down 43.4% at $11.57 per barrel. On Monday, crude futures for May fell below zero for the first time in history.
Investors also digested another batch of corporate earnings showing the economic fallout of the virus on Tuesday. Shares of IBM fell 3% after reporting a decline in revenue. Coca-Cola fell 2.5% as the beverage company said global volumes plunged 25% due to the coronavirus pandemic.
Netflix and Chipotle Mexican Grill both rose in extended trading following their quarterly earnings reports. Netflix reported global streaming net additions came in a 15.8 million, far higher than the 8.2 million expected. Netflix, which has rallied nearly 35% this year, is benefiting from the stay-at-home trend. Chipotle saw digital sales surge more than 80% as the revved-up online orders during the coronavirus shutdown.
Before the bell on Wednesday, Delta Air Lines, AT&T, and Biogen will report earnings.
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