Wall Street to open sharply lower as virus fears shut down California

Wall Street was set for strong declines at the open on Thursday as the fast-spreading coronavirus led California to declare an emergency, while airline stocks were hammered by crippled travel demand.

The S&P 500 had ended 4 percent higher on Wednesday, as Joe Biden's surprising lead in the Democratic primaries distracted traders from the widening spread of the pathogen in the United States.

The benchmark index has recouped nearly half of its losses from its worst week since the 2008 financial crisis, but is still about 7.5 percent below its record close on Feb. 19.

Fears about economic growth resurfaced on Thursday as the US death toll rose to 11 and California reported the first fatality outside Washington state, a day after lawmakers approved an $8.3 billion bill to combat the outbreak.

Wall Street's fear gauge jumped 14 percent to 36.60.

"Volatility is the norm right now as we ascertain how much economic damage is going to be done in the wake of the coronavirus epidemic," said Art Hogan, chief market strategist at National Securities in New York.

Recent data have signaled underlying strength in the domestic economy. Official figures on Thursday showed weekly jobless claims fell last week, following a strong reading of the services sector.

All eyes will now be on the crucial non-farm payrolls report due on Friday.

US airline Southwest tumbled 3 percent after issuing a revenue warning as the outbreak crushes passenger numbers, while United Airlines and JetBlue Airways cut flights and implemented cost controls.

The International Air Transport Association also flagged a potential $113 billion hit to global airline revenue, sending shares in American Airlines Group Inc, Delta Air Lines and Spirit Airlines down more than 3 percent.

Cruise operators Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings dropped between 3.7 percent and 4.9 percent as health officials screened people on a cruise line linked to the death in California.

At 8:54 am ET, Dow e-minis were down 564 points, or 2.09 percent. S&P 500 e-minis were down 66.25 points, or 2.13 percent and Nasdaq 100 e-minis were down 183.75 points, or 2.07 percent.

Traders are betting on more monetary easing after an emergency interest rate cut by the Federal Reserve earlier this week.

The benchmark 10-year US Treasury yield dipped below 1 percent again, while shares in Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs, Wells Fargo & Co and Morgan Stanley fell between 2.9 percent and 3.5 percent.