Dow futures fall 300 points as traders brace for an expected record surge in jobless claims

U.S. stock futures fell early Thursday morning trading as investors looked ahead to the national weekly initial jobless claims data, which are expected to show a record-breaking spike.

Dow futures indicated an opening drop of more than 300 points at Thursday’s open. S&P 500 futures and Nasdaq-100 futures pointed to opening losses of more than 1%.

The move came as the Senate unanimously approved a $2 trillion economic relief package late Wednesday, which aims to cushion the blow from the coronavirus outbreak. The stimulus bill now heads to the House, which will push to pass it by voice vote Friday morning as most representatives are out of Washington. The Dow was up more than 13% in two days for its first back-to-back gain since February in anticipation of the stimulus.

The Senate rushed to pass the bill as data is expected to show a massive spike in unemployment claims after businesses shuttered to try to slow the outbreak’s spread.

National weekly initial jobless claims data will be out 8:30 a.m. ET. Economists are projecting record-shattering numbers. Citi is the most bearish, with estimates of roughly 4 million claims for last week.

On Wednesday California Gov. Gavin Newsom said that the state alone has seen 1 million unemployment claims in less than two weeks as the pandemic has led to businesses being shut down across the state.

The claims numbers are for the week ending March 21. The official consensus estimate from Dow Jones is calling for 1.5 million claims.

“What investors really need to gain confidence into repositioning for growth is data that suggests the … outlook for risks for the coronavirus itself are improving,” Todd Jablonski, chief investment officer of Principal Portfolio Strategies at Principal Global Investors, told CNBC’s “Street Signs Asia” on Thursday morning Singapore time.

“I think it’s key to not apply pre-crisis fundamentals against post-crisis prices to try to determine where value sits,” Jablonski said.

On Wednesday, the Dow climbed more than 2%, or 495.64 points to close at 21,200.55. Boeing and Nike fueled the 30-stock index, rising 24% and 9%, respectively. The S&P 500 also registered a gain, climbing 1.1%. The Nasdaq Composite was the relative underperformer, dipping 0.5% as Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all closed lower.

Stocks rallied for much of the day after the White House and Senate agreed on a $2 trillion coronavirus stimulus bill early Wednesday morning. Wednesday’s gains extended Tuesday’s historic rally, which saw the Dow register its best day since 1933 and post its largest single-day point gain in history. Tuesday was the S&P 500’s best day since 2008. 

In what’s been a bout of extreme volatility for the market, this was the first time the indexes managed to post back-to-back gains since February.

Despite the gains, the major averages still have a lot of ground to make up for before returning to record highs. The S&P 500 is 27% below its February all-time high, while the Dow is trading 28.3% below its record. 

The Federal Reserve has stepped in in an effort to shore up the economy as the coronavirus outbreak and subsequent business slowdown continues to wreak havoc on global markets. Among other things, the central bank has slashed interest rates to near zero and announced an unprecedented quantitative easing program.

Former Fed Chairman Ben Bernanke said Wednesday that current Chairman Powell has been “extremely proactive,” while noting that markets could still be in for steeper declines ahead.

“It is possible there’s going to be a very sharp, short, I hope short, recession in the next quarter because everything is shutting down of course,” he said on CNBC’s “Squawk Box.” But he did sound an optimistic note, saying that there could also be a “fairly quick rebound.”

—CNBC’s Jacob Pramuk contributed reporting.

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