By Alden Bentley
March 1 (Reuters) - U.S. stock index futures tumbled as
trading reopened on Sunday night with investors still unnerved
by the coronavirus and taking little solace from weekend
comments by U.S. officials that aimed to soothe panic about a
pandemic.
Senior officials in President Donald Trump's administration
on Sunday tried to reduce concern about a global recession,
saying the U.S. public had over-reacted after numerous cases
were reported in the country and that stocks would rebound due
to the economy's underlying strength.
S&P 500 e-mini futures ESc1 were last down about 1%,
indicating another bad day for the benchmark index on Monday
after it fell more than 11% last week, its worst since the 2008
financial crisis.
The stampede away from risk last week drove investors into
assets considered safer than stocks, like gold and government
securities. The flight to quality looked set to continue as U.S.
10-year Treasury note futures TYc1 jumped, pushing the implied
yield below 1% for the first time. That's a sign traders are worried about growth and expect
the Federal Reserve cut interest rates to help restore
confidence and cushion the hit from the virus to demand and the
flow of goods and people around the world.
"We can expect, perhaps, if this continues through the
night, a weaker open. The fact the 10-year yield looks like it
may push down is not a good sign for the equity market," said
Quincy Krosby, chief market strategist at Prudential Financial
On Saturday, China, where the coronavirus first appeared,
reported a record contraction in its manufacturing and service
sectors because of the outbreak, illustrating the significant
impact of the epidemic.
"We need to see more of a peak panic before investors are
convinced it's time to go in," Krosby said, adding that a
recovery in the 10-year yield would be a gauge of steadying
sentiment.
Speaking to NBC's "Meet the Press" on Sunday, Vice
President Mike Pence, who is leading the administration's
response to the virus, said that the market "will come back."
"The fundamentals of this economy are strong. We just saw
some new numbers come out in housing and consumer confidence and
business optimism. Unemployment is at a 50-year low. More
Americans are working than ever before," Pence said.
When asked on the "Fox News Sunday" program if the American
people are over-reacting to the current threat, U.S. Health and
Human Services Secretary Alex Azar responded, "Yes, absolutely."
World Health Organization director-general Tedros Adhanom
Ghebreyesus likewise told CNBC on Sunday that the market panic
was uncalled for, even after the organization on Friday raised
its threat assessment for the virus to its highest level.
Their comments followed those of Federal Reserve chair Jay
Powell who also sought to quell fears stoked by China's dire
economic data, flagging that the central bank would take action
if necessary to support the economy. So far around 85,000 people in 53 countries have been
infected. China, the world's second-largest economy, is home to
the vast majority of cases. About 70 have been diagnosed in the
United States.
A Washington state man in his 50s with underlying health
conditions was the first American to die from the virus,
officials said Saturday.