(Bloomberg) — U.S. stock futures erased losses, as traders reacted to China’s rate cut on seven-day reverse repurchase agreements on Monday. As part of the stimulus, the People’s Bank of China injected 50 billion yuan ($7.1 billion) into the banking system.

Contacts on the S&P 500 expiring in June rose 0.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} at 1:41 p.m. in Tokyo on Monday, erasing a drop that exceeded 3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} in early trading. China’s central bank cut the interest rate it charges on loans to banks by 20 basis points, the biggest amount since 2015 as authorities ramp up their response to cushion an economic slowdown.

U.S. Futures have “started picking up following China’s extensive cut of 20bps to 7 day repo rate, providing some support for the market,” said Jingyi Pan, market strategist at IG Asia Pte.

Dramatic swings have been the rule in global markets for five weeks as investors tried to price in an outbreak that has shut down economies, put millions out of work and made it all but certain corporate earnings will drop. The S&P 500 is trading at just under 17 times combined profits in the last year, down from 22 times last month.

“We have to get used to the fact that we will have some high volatility and we will have multiple retests of lows before we find one.,” said Ed Campbell, portfolio manager and managing director at QMA. “We’re pricing in a recession. That doesn’t mean there isn’t more downside from here. Bottoming is a process.”

Whether valuations account for the prospect of a global recession is the question traders must answer. Stocks last traded at similar multiples four years into the bull market that ended earlier this month. They bottomed out at about 12 in the years after the financial crisis, a level that would require another 22{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} drop to reach based on existing 2020 earnings estimates.

Analyst forecasts on individual stocks compiled by Bloomberg indicate S&P 500 companies will earn $161.20 a share this year, about 0.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} above the $160.60 posted for 2019. The 2020 projection is down from $174.40 just before markets rolled over in the middle of February.

Gains in futures would be halted at 2,657.50 and declines at 2,403.50 by Chicago Mercantile Exchange volatility limits.

Quarter-end strains could add to the nervousness on Monday and Tuesday as financial firms rein in collateral lending to shore up balance sheets. The MSCI gauge of global equities is down about 23{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} since the start of the year, on course for its worst quarter since the end of 2008.

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U.S. Stock Futures Erase Earlier Losses After China Rate Cut