By Noreen Burke
Investing.com – U.S. stock futures pointed to strong gains at the open on Wednesday as former Vice President Joe Biden surged ahead in Super Tuesday voting and markets digested the U.S. Federal Reserve’s surprise rate cut aimed at offsetting economic fallout from the coronavirus.
By around 07:15 AM ET (1215 GMT) surged 671 points, or around 2.6%. were up 2.3% while rose a similar amount.
The gains in premarket trade came after all three major U.S. stock market indices dropped more than 3% in Tuesday as the Fed rate cut fanned fears over about the scale of the coronavirus’ impact on the economy.
Market sentiment was boosted by a strong performance from Joe Biden in the U.S. Democratic Party primaries.
Biden, a moderate considered less likely to raise taxes and impose new financial regulations, won primaries in at least eight states. That set up a head-to-head battle for the Democratic presidential nomination with democratic socialist Bernie Sanders.
Investors were also reevaluating Tuesday’s dramatic 50 basis point rate cut by the Fed which came two weeks ahead of a regularly scheduled policy meeting. The last time the Fed made a rate cut between scheduled meetings was in October 2008 at the height of the global financial crisis.
Initially the move failed to quell fears over the economic impact of the rapidly spreading virus, with the Fed acknowledging scale of the challenge and the limits of monetary policy to deal with a public health crisis.
More than 3,000 people have been killed by the coronavirus, about 3.4% of those infected and it continues to spread quickly beyond the epicentre in China.
The yield on the benchmark U.S. Treasury bond, which falls when prices rise, held below 1% – not far over the overnight low of 0.9060%.
— Reuters contributed to this report
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