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Futures slip as investors digest signs coronavirus pandemic is easing

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Stock futures were lower in early trading Wednesday following a big rally in the previous session fueled by optimism that the coronavirus outbreak is improving in the U.S. 

Dow futures fell, indicating a loss of about 350 points at the open on Wednesday. The S&P 500 and Nasdaq were also slated to open in the red. 

Signs that the coronavirus pandemic is easing drove stocks higher on Tuesday, even as the first batch of quarterly earnings showed the outbreak is taking a toll on corporate profits. The Dow climbed about 560 points, helped by Johnson & Johnson, Microsoft, and Apple which rose 4.5%, 4.9%, and 5%, respectively. The S&P 500 also registered a significant gain, rising more than 3%.

The tech-heavy Nasdaq Composite rose 4%, led by Amazon, which notched an all-time high as investors bet on increased demand amid the nationwide shutdown. The Nasdaq is less than 14% from its 52- week high on February 19. 

"The bending of the virus curve simultaneously across this country and around the globe has brought widespread and serious national conversations about restarting the economy," Leuthold Group's chief investment strategist Jim Paulsen told CNBC. "For a crisis whose primary tagline for investors was 'that is completely unknown,' this is perhaps the first time there is some semblance of clarity as to a timeline for the end of this sad situation." 

The market rallied on the idea that "maybe the worst of the economic freefall is over" and talk about reopening the economy, Charles Schwab's Jeffrey Kleintop told CNBC's "Squawk Box Asia" on Wednesday morning Singapore time.

But Kleintop, who is chief global investment strategist at Charles Schwab, warned that "the stock market may have a tougher time from here." He said one unknown is the possibility of a second wave of infections as lockdown measures lift.

President Donald Trump said Tuesday that he believes some states will be able to lift the strict social distancing measures that have strained their economies before the end of April.

"The plans to reopen the country are close to being finalized," Trump said at a press briefing on the virus in the Rose Garden. "The day will be very close because certain states as you know are in a much different condition and are in a much different place than other states. It's going to be very very close. Maybe even before the date of May 1st," he said.

New York Gov. Andrew Cuomo's optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States, also boosted investor sentiment. He said Tuesday deaths related to the virus in the state are leveling off. 

Still, the dismal earnings ahead from U.S. companies grappling with the coronavirus shutdown could spook investors. Analysts expect S&P 500 earnings growth to decline 10.2% in the first quarter year-over-year, according to Refinitiv. 

Generally, bank earnings came in well below expectations on Tuesday due to the economic impact of the coronavirus. However, JPMorgan's trading division also posted a 32% increase in revenue to a record $7.2 billion.

Bank earnings continue on Wednesday with Citigroup, Bank of America, and Goldman Sachs reporting before the bell. Health-care giant UnitedHealth and Bed Bath & Beyond also report quarterly earnings on Wednesday. 

For the first quarter, 88 negative earnings pre-announcements have been issued by S&P 500 corporations, according to Refinitiv. A wave of major companies has already withdrawn their full-year guidance.

Separately, shares of Tesla were rallying in the premarket after Goldman Sachs initiated the company with a "buy" rating, setting a target price at $864. Shares of the automaker closed Tuesday at $709.89, up 9%.

Airline stocks were also up sharply across the board in premarket trading after several U.S. airlines on Tuesday said they reached agreements with the Treasury Department for billions in government grants aimed at softening the fallout from the coronavirus outbreak.

Retail sales for March are expected to crater 8%, according to Dow Jones, and will be released at 8:30 am ET on Wednesday. 

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