Dow, S&P Futures Drop Signaling An End To 3-Day Long Recovery Rally

The United States futures contracts dropped early Friday, signaling an end to a three-day-long market rally.

What Happened

The drop in futures came as the United States surpassed China and Italy to become the worst-hit novel coronavirus (COVID-19) country. Nearly 86,000 COVID-19 cases were confirmed in the country at press time, including 1,296 deaths, as per the data from Johns Hopkins University.

The markets had rallied earlier this week, ending a streak of single-day losses that were some of the worst since the Black Monday of October 1987.

A $2 trillion coronavirus stimulus package proposed by the federal government improved investor sentiments. The bill was passed by the Senate late Wednesday after five days of back and forth negotiations, and it goes for a vote at the House of Representatives on Friday.

President Donald Trump has said that he would "immediately" sign the bill once it reaches his table.

"I wouldn't necessarily take the price action in the risk markets right now to be a true reflection that this is over," head of U.S. rates trading at AmeriVet Securities, Gregory Faranello, told CNBC.

"This is going to be an economic fallout. We're seeing in two weeks what we would normally see maybe in a year and a half or two years."

Trump has insisted on restarting the economy by Easter, something that the businesses would find hard to do, with the spread of the virus.

Microsoft Corporation MSFT co-founder Bill Gates earlier this week criticized the president for the suggestion, without naming him directly.

The billionaire philanthropist said that you couldn't ignore the "pile of bodies in the corner," while you go about your daily life, just because "there's maybe a politician who thinks GDP growth is all that counts."

According to MarketWatch report Thursday, the number of unemployment claims could increase further to as many as 5 million next week, as some states, including New York, New Jersey, and California, underreported the number of initial claims.

Price Action

Dow Jones futures were down 3.06% at 22,664.00 at press time. S&P futures traded 2.98% lower at 2,530.25 and Nasdaq 100 futures dropped 2.52% at 7,646.25.

The U.S. Dollar dropped 0.57% against Japanese yen at 108.95.