This is a developing story. Check back for updates.
Stock market futures on Monday evening pointed to a lower open on Tuesday following the roaring comeback rally that saw the Dow Jones Industrial Average post its biggest percentage gain since March 2009 and largest ever point surge.
As of 11:48 p.m. ET Monday, Dow futures were down just 5 points but pointed to an implied opening loss of 229.32 points on Tuesday. S&P 500 and Nasdaq-100 futures also pointed to losses for the two indexes at Tuesday’s open.
In a volatile session, Dow futures had jumped 150 points earlier.
The moves came amid expectations of big central bank stimulus over the coming days to boost the economy and markets.
The Reserve Bank of Australia announced on Tuesday a cut in its cash rate by 25 basis points to 0.5%, a new record low.
In a statement announcing the decision, the Australian central bank’s governor acknowledged that the coronavirus outbreak overseas is having a “significant effect” on the country’s economy and said the move to ease monetary policy was done to “provide additional support to employment and economic activity.”
That came amid expectations that Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will lead a G-7 call on Tuesday at 7 a.m. ET, CNBC’s Steve Liesman reported. That will be a “coordinating call” for the financial and economic response to the coronavirus, a source familiar told CNBC. A group statement will be sent after the call.
Monday saw U.S. stocks snap a losing streak that had gone on for over a week. Some investors are skeptical that the rally has legs without a significant central bank response. Even if that comes to fruition, investors have their doubts the market has seen the end of its tumultuous trading of the last six days.
Jeff Mills, the chief investment officer at Bryn Mawr Trust, said on “Power Lunch” that he was not advising clients to buy back into the market and that Monday’s rally was just a “technical snapback.”
“I think the spectrum of outcomes is so wide here that one trading day is not going to resolve all of our issues, so we’re telling our clients just to sit tight for now,” Mills said.
The U.S. stock marked saw a historic bounce back on Monday, with the Dow gaining nearly 1,300 points. The Dow finished up 5.1% on the the day, while the S&P 500 gained 4.6%.
Some expect central banks around the world to announce a coordinated policy response to fight the coronavirus. Goldman Sachs chief economist Jan Hatzius said on “Closing Bell” that he expects most central banks for G10 countries to cut rates, with only the Bank of Japan abstaining.
Futures traders are expecting aggressive action from the Federal Reserve in particular, with the CME Fed Watch tool showing that the market has priced in 75 basis points of cuts through April.
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