U.S. Stock Futures Fall, Hit Trading Curbs

Stock futures fell sharply Sunday night after the Federal Reserve slashed its interest rate target to near zero and announced huge bond purchases aimed at keeping bond markets functioning and supporting the U.S. economy.

Futures contracts on the Dow Jones Industrial Average fell by 4.5 percent, implying that the Dow would open down by around 1,243 points. The S&P futures fell by 5 percent, hitting their so-called ‘limit down’ before rising slightly to a decline of 4.8 percent. Nasdaq futures were off by around 4.5 percent.

The price of oil dropped by around 5 percent Sunday evening. Yields on Treasuries look set to decline based on futures contracts.

Prices in futures markets can move rapidly and do not necessarily reflect what happens after the opening bell. Particularly when the market is adjusting to unexpected news or acute changes in conditions, futures can be very volatile.

Many investors have said that they are worried that the Fed’s huge moves Sunday night might foreshadow worse news about the economy or the coronavirus than expected.  The question on the lips of many traders Sunday night is, “What does the Fed know that we don’t?”