Futures fall after Fed's sobering outlook, fears of second virus wave

[June 11, 2020]  By Medha Singh

(Reuters) - U.S. stock futures extended declines on Thursday, a day after the Federal Reserve's economic forecast confirmed that the pain from the coronavirus outbreak will be felt for years, with investors also nervous about a second wave of infections.

The S&P 500 and the Dow ended lower on Wednesday as Fed Chair Jerome Powell acknowledged it could take years for the millions of people laid off due to COVID-19, to get back to work.

The U.S. central bank reiterated its pledge to provide years of extraordinary support to the economy battered by the pandemic.

A Labor Department report due at 8:30 a.m. ET on Thursday is expected to show another 1.55 million people applied for state unemployment benefits for the week ended June 6.
 

Conviction that the easing of lockdowns and massive stimulus would help the economy bounce back quickly to pre-pandemic levels has been pivotal in the S&P 500 <.SPX> being about 5% below its record high.

Wall Street's fear gauge, the CBOE volatility index <.VIX> briefly crossed 30 points for the first time since June 1. New infections are rising slightly in the United States after five weeks of declines as commerce and movement picks up across the country, a Reuters tally showed.

At 6:22 a.m. ET, Dow e-minis <1YMcv1> were down 500 points, or 1.85%. S&P 500 e-minis <EScv1> were down 46.75 points, or 1.47% and Nasdaq 100 e-minis <NQcv1> were down 110 points, or 1.09%.

Traders wear masks as they work on the floor of the New York Stock Exchange in response to the outbreak of the coronavirus disease (COVID19) in the Manhattan borough of New York, U.S., May 27, 2020. REUTERS/Lucas Jackson

Shares of banks, which tend to benefit in a higher rate environment, slipped on Thursday as Fed policymakers saw the key overnight interest rates remaining near zero through at least 2022.

Bank of America Corp <BAC.N>, Citigroup Inc <C.N> and JPMorgan Chase & Co <JPM.N> fell between 4.0% and 4.8% in premarket trading.

Online food delivery firm Grubhub Inc <GRUB.N> rose 7.5% after Europe's Just Eat Takeaway.com NV <TKWY.AS> agreed to buy its U.S peer in an all-stock deal for $7.3 billion. The deal, if completed, would create the world's largest food delivery company outside China.

(Reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Shounak Dasgupta)

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