Dow set to rise following the measure’s worst drop in 2 years

U.S. stock index futures were slightly higher Tuesday morning, giving back a more than 100 point gain following the market’s worst decline in two years on coronavirus.

As of 6 a.m. ET, Dow futures indicated an implied gain of about 30 points at the open, well off the highs of the premarket session. Futures on the S&P and Nasdaq were both slightly higher.

The seesaw trading came after United Airlines and Mastercard warned about the potential impact the coronavirus will have on 2020 results. The shares added to their Monday regular session declines with United losing 0.6% and Mastercard dropping nearly 3% after hours.

Investors fled the stock market Monday as a surge in coronavirus cases outside of China intensified fears of a prolonged global economic slowdown.

The Dow sank more than 1,000 points, suffering its biggest point and percentage drop since February 2018. The S&P 500 plunged 3.3%, also the worst drop in two years. With Monday’s declines, the S&P 500 and the Dow both wiped out all of their 2020 gains.

The steep sell-off came as the coronavirus spread rapidly in other countries, especially South Korea, Iran, and Italy.

South Korea raised its coronavirus alert to the “highest level,” with the latest spike in numbers bringing the total infected to more than 800. Meanwhile, Italy has been the worst affected country outside of Asia, with more than 130 reported cases and seven deaths. Iran also confirmed 12 deaths.

Traders will be waiting on coronavirus infection numbers from China, South Korea, and Italy overnight to dictate trading.

“The huge jump over the weekend to various other countries has many reassessing 2020 growth estimates,” said Ryan Detrick, senior market strategist for LPL Financial. “We could see quickly decreasing earnings and growth outlooks.”

But if history is any guide, stocks tend to rebound immediately following steep losses. Going back to 2009, the S&P 500 has returned 1% on average the next day the benchmark shed more than 2% on Mondays, according to Bespoke Investment Group.

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