U.S. stock futures slumped 1.6 percent on Thursday, a day after a breathtaking rally drove gains of more than 1,000 points on the Dow Industrials for the first time ever and helped other main indexes notch their largest daily percentage gains in nearly a decade.
The rebound was fueled by a strong U.S. holiday sales report, a jump in oil prices and investors reversing bets against a wide range of stocks after four days of declines.
Despite Wednesday's surge, the Dow and the S&P are still down more than 10 percent for the month, on pace for their biggest monthly percentage drop since February 2009.
"Such rallies are not uncommon in troubled times, and we have experienced many of them in past bear markets," said Hussein Sayed, chief market strategist at FXTM.
"To call for a bottom, we need at least a couple of days of strength, not just in price, but also in trading volume, breadth of the market, and fundamentally supported environment. Until we see a shift in fundamentals, it's challenging to build on a single-day rally."
Traders and investors also said technical market factors contributed to Wednesday's rally as the S&P was its most oversold in years by some technical measure.
At 7:05 a.m. ET, S&P 500 e-minis were down 1.54 percent. Dow e-minis were down 1.58 percent and Nasdaq 100 e-minis were down 1.54 percent.
Weighing on sentiment on Thursday was President Donald Trump's comment that he was prepared to wait as long as it takes to get funding for his U.S.-Mexico border wall, a demand that has triggered a partial shutdown of the federal government that is now in its fifth day.
Congress was scheduled to reconvene after a holiday break on Thursday and resume debate on the matter.
Separately, Reuters reported Trump is considering an executive order in the new year that would bar U.S. companies from using telecommunications equipment made by China's Huawei Technologies Co Ltd and ZTE.
This comes as China and the United States plan face-to-face consultations to resolve their trade dispute, which has rocked stock markets, along with concerns over slowing economic growth and rising interest rates.
After strong holiday sales report from Mastercard on Wednesday, investors will watch for the consumer confidence data due at 10:00 a.m. ET, which is likely to show the index fell to 133.7 in December from 135.7 in the month before.
(Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva)