By Joanne Chiu and Avantika Chilkoti
U.S. stock futures recovered ground Friday, following the biggest rout in the American stock market since mid-March.
Futures tied to the Dow Jones Industrial Average gained 1.8%, suggesting that the blue-chips index will recover some of its losses from Thursday's 6.9% tumble. The pan-continental Stoxx Europe 600 climbed 0.9%.
U.S. stocks have rallied in recent weeks to erase most of this year's losses, until coming to a jarring halt Thursday. The optimism reflected in equities has been at odds with the reams of data signaling that the pace of the global economic recovery following the coronavirus pandemic is likely to be slow and uneven, with the threat of a second wave of infections that could dim prospects further.
A fear of missing out on the rebound in equities, optimism about the technology sector's prospects, the wall of cheap money unleashed by policy makers so far, and confidence the central banks will take more steps to shield major economies from the worst of the fallout have prompted the steep ascent in stocks since the end of March. Some of those reasons may be back in play Friday, or markets may be seeing a temporary rebound, investors said.
"We can't discount the fact that there is a lot of money sitting on the sidelines," said Brian O'Reilly, head of market strategy for Mediolanum International Funds. "It's a trading market at the moment -- more than a long-term fundamentals market -- so on any setback like yesterday, you're likely to see people come in and bid the market higher."
Investors will get fresh cues on how the social unrest of the last few weeks and the slow reopening of the economy have impacted consumer sentiment when the University of Michigan discloses its latest index reading for the opening weeks of June at 10 a.m. ET.
Treasury Secretary Steven Mnuchin said Thursday that the government is weighing a second round of stimulus payments for Americans. That would help prop up spending and plug household budgets, adding to the $267 billion distributed by the Internal Revenue Service so far this year.
Following Thursday's selloff, President Trump criticized the Federal Reserve for its gloomy economic forecasts and predicted a strong second half to the year. Those comments were in response to Fed Chairman Jerome Powell's projections on Wednesday that the economy faced a potentially long road to full recovery, and the labor market may face more hurdles.
In Asia, South Korea's Kospi Composite fell about 2%, while Hong Kong's Hang Seng Index retreated 0.7%. The Shanghai Composite ended the day largely flat.
The stance of the Fed -- which also signaled its willingness to offer more support to the economy and credit markets -- and its counterparts represented a major support for markets, despite Thursday's selloff, according to Ken Peng, head of Asia investment strategy at Citi Private Bank.
"There's just too much cash sitting around for this to be a deep correction," Mr. Peng said. "The Fed and other major central banks have already made it very clear they're there to buy the bottom basically," he said.
The yield on the 10-year Treasury note ticked up to 0.710%, up from 0.651% on Thursday. Bond yields rise as prices fall.
Oil prices ticked higher. Brent crude, the global oil benchmark, edged up 0.7% to $38.83 a barrel, after tumbling 7.6% on Thursday.
Write to Joanne Chiu at firstname.lastname@example.org and Avantika Chilkoti at Avantika.Chilkoti@wsj.com