Stock futures took a wild ride heading into Tuesday’s Wall Street open, casting doubt on the reliability of premarket trading as an indicator of where things stand.
Futures overnight were “limit up” at one point, a situation where trading is halted because they have hit a 5% gain and can go no higher. That came after the market’s worst day since the October 1987 Black Monday crash.
However, shortly before 6:30 a.m. ET, markets turned around and were negative at one point. Then they quickly shot higher again and pointed to a big gain.
The market swung between modest gains and losses at the open.
Observing the massive swings in the premarket, CNBC’s Jim Cramer said futures were losing their reliability and are “a total joke.”
“Don’t even look at them. You can’t have a bull market at 3:30 a.m. and have it end by 7 a.m.,” the “Mad Money” host said.
Speaking later on “Squawk on the Street,” Cramer said investors would be better off focusing on individual stocks.
“There are going to be opportunities today,” he said.
The overnight futures are the latest market to show extreme volatility, leaving many investors to believe computer trading is helping to exaggerate the moves seen during this market collapse stemming from the coronavirus outbreak.
