Traders, some in medical masks, work on the floor of the New York Stock Exchange (NYSE) on March 20, 2020 in New York City. Trading on the floor will temporarily become fully electronic starting on Monday to protect employees from spreading the coronavirus. The Dow fell over 500 points on Friday as investors continue to show concerns over COVID-19.
Spencer Platt | Getty Images
U.S. stock futures plunged again on Sunday night as Wall Street waits on Washington to agree to an economic stimulus and rescue plan to combat the giant economic blow from the coronavirus outbreak.
As of 11:25 p.m. ET, Dow Jones Industrial Average futures fell more than 600 points, pointing to a Monday opening loss of around 637 points. S&P 500 and Nasdaq-100 futures also pointed to losses at the Monday open.
Earlier in the session, futures hit their “limit down” levels, falling 5%. Downside limits to futures contracts are implemented to ensure orderly market behavior once trading hits a certain threshold. No trades below that level are allowed.
A fiscal stimulus bill failed a key procedural Senate vote Sunday as Democrats warned the measure did not do enough to help workers and too much to bail out companies. Earlier, House Speaker Nancy Pelosi had signaled she was not on board with the Republican-version of the stimulus plan, saying: “From my standpoint, we’re apart.”
However, Senate Minority Leader Chuck Schumer, D-NY, said disagreements over the bill could be overcome in the next 24 hours. A spokesman for Schumer later added the senator and Treasury Secretary Steven Mnuchin had a “productive meeting.”
National Economic Council Director Larry Kudlow said Saturday an economic stimulus package will total more than $2 trillion, noting it will be equal to roughly 10% of U.S. economic output. Last week, President Donald Trump signed a $100 billion bill that expanded paid leave in the U.S.
Mnuchin said Sunday that financing programs to stimulate the economy could be worth $4 trillion, noting these efforts will include coordination with the Federal Reserve to provide businesses with necessary liquidity.
“When this started, this was a bit unique to the airline industry since we had shut down most of airline travel,” Mnuchin said. “This liquidity facility is a broad-based liquidity facility working with the Fed.”
David Kostin, chief U.S. equity strategist at Goldman Sachs, said the difference between a fast or a prolonged recovery in the stock market will come down to three factors: How quickly the virus is contained, whether businesses will have ” access to enough capital and liquidity to last the 90 to 180 days,” and whether fiscal stimulus can stabilize growth forecasts.
“If short-term shutdowns lead to business defaults, closures, and permanent layoffs, the damage to corporate earnings growth could persist well after the virus is contained,” Kostin said in a note.
Wall Street has been clamoring for fiscal economic relief as the number of coronavirus cases keep surging. The number of confirmed global cases surpassed 300,000 over the weekend as deaths now total over 13,000, according to data from Johns Hopkins University.
In the U.S., more than 30,000 cases have now been confirmed. New York Gov. Andrew Cuomo said Sunday cases in the state soared to 15,168 over the weekend. That’s more than in France or South Korea.
The outbreak has led the New York Stock Exchange to close its trading floor and temporarily move to all-electronic trading beginning Monday. NYSE expects trading to proceed as normal.
Trump announced Sunday he activated the National Guard in California, New York and Washington state — the three states with the highest reported coroavirus deaths — to curtail the virus’ outbreak.
“Things will get worse before they get better and the markets will continue to reflect that reality,” said Marc Chaikin, CEO of Chaikin Analytics, in a note. “This means that a bottoming process will take more time and probably inflict more damage to equities.”
Stocks suffered their biggest one-week decline since the financial crisis in 2008, with the S&P 500 dropping more than 13%. Those losses put the broad market average more than 32% below its record set on Feb. 19.
Last week ended with all 11 S&P 500 sectors closing more than 20% below their respective 52-week highs. The S&P 500 was also on pace for its worst monthly performance since 1940.
Expectations for the U.S. economy have also quickly deteriorated. Economists at Goldman Sachs wrote Friday they expect a 24% contraction for the second quarter after a 6% drop in the first quarter. Morgan Stanley economist Ellen Zentner said in a note Sunday she expects a historic 30% contraction in the second quarter.
“Suffice to say that the economy entered a unique, sudden-stop recession in March,” wrote Prajakta Bhide, strategist at MRB Partners. “If there is no concrete evidence of meaningful progress toward controlling the epidemic in the next eight weeks, there will be no basis for people and businesses to feel safe to begin to normalize economic activity.”
Investors have also been rattled by a sharp decline in crude prices. West Texas Intermediate futures fell 29.3% last week, their biggest weekly fall since January 1991. U.S. crude is also more than 66% below its most-recent 52-week high.
The steep losses in crude are forcing investors to sell other assets such as stocks or bonds to to cover the losses in their energy positions. Crude futures briefly fell more than 8% Sunday night before clawing back most of those losses.
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.