Stocks traded lower Monday as investors prepared for a bleak first-quarter earnings season that will see results and outlooks hammered as a result of the COVID-19 pandemic.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, -2.23% fell 509 points, or 2.2%, to 23,210, while the S&P 500 SPX, -1.95% dropped 1.9% to 2,736. The Nasdaq Composite COMP, -0.89% was off 0.9% at 8,081.
U.S. and European markets were closed Friday for the Good Friday holiday. European markets remain closed Monday for Easter. The S&P 500 last week jumped 12.1% for its largest weekly rise since 1974, while the Dow advanced 12.7% and the Nasdaq Composite rose 10.6%.
Market Extra:16 million people just got laid off, but U.S. stocks had their best week in 45 years
What’s driving the market?
“The big banks will kick off earnings season this week, and everyone is bracing for some ugly results,” said Edward Moya, senior market analyst at Oanda, in a note.
“Despite all the uncertainty that persists regarding the coronavirus, optimism is growing that the virus may be peaking in major global hot spots and that the Fed and Capitol Hill have delivered enough stimulus to provide a safety net for corporate America,” he said.
Markets may face a key test this week as earnings season gets underway. Bears contend that the rebound off the March 23 lows has gone too far, too fast and that a retest of the downside will likely come as companies continue to downgrade or suspend their outlooks.
See: Stock-market bulls hope that the S&P 500 will rally further even as corporate earnings crater
“Investors may gain more confidence as the clouds start to clear across the economic chasm, gaining visibility to a return to profitability. That being said, it is not uncommon to see mini-rallies amid ongoing bear markets, followed by further market weakness as new information causes investors to reassess their positions,” wrote analysts at Glenmede, in a note.
Stocks were not helped much by crude prices, which put in a mixed performance late Sunday and Monday. On Sunday, the Organization of the Petroleum Exporting Countries, Russia and the U.S. completed a deal that would see global output cut by 9.7 million barrels a day beginning in May. West Texas Intermediate crude for May delivery CLK20, +2.28% was last up around 1.1%.
The deal ends a month-long price war between Saudi Arabia and Russia that flooded the world with unneeded crude and intensified a meltdown in oil prices. The selloff in crude prices was seen amplifying volatility across global financial markets as investors reeled from the economic impact of the pandemic and the resulting near-shutdown of much of the world economy.
But analysts had warned that a lasting lift to crude prices could prove elusive given the scale of the hit to demand that had already left the oil market substantially oversupplied.
The daily death toll from COVID-19 in New York City, the center of the outbreak in the U.S., topped 700 on Sunday for a sixth straight day, but the number of hospitalizations has continued to slow, offering a sign of hope.
See:After worst week of coronavirus deaths, New York starts to see signs of hope
Dr. Anthony Fauci, the top U.S. infectious-disease expert, told CNN on Sunday that the economy in parts of the country could be allowed to reopen as early as May.
The number of COVID-19 cases around the world rose to 1.86 million on Monday, while the number of fatalities rose to 114,331, according to data compiled by the Johns Hopkins Whiting School of Engineering’s Center for Systems Science and Engineering. The U.S has the most cases at 557,590 and the most deaths at 22,109. At least 41,831 Americans have recovered.
Federal Reserve Vice Chairman Richard Clarida on Monday said the U.S. economy remained fundamentally sound and that the central bank wouldn’t need to continue its historic support of financial markets indefinitely.
Which companies are in focus?
- Shares of shale producers and major oil companies were mixed in the wake of the deal on output cuts. Shares of Pioneer Natural Resources Co. PXD, +1.95% were up 2.8%, while Dow component Exxon Mobil Corp. XOM, -2.08% was down 1.7% and fellow blue-chip Chevron Corp. CVX, -0.07% rose 0.7%.
- Oil-field-services company Baker Hughes Co. BKR, +1.12% saw shares rise 1.3% after it said it expects to book a $15 billion noncash impairment charge in the first quarter, plus another $1.5 billion of restructuring, impairment and other charges. Baker Hughes has tumbled nearly 50% in 2020.
- Shares of construction-equipment maker Caterpillar Inc. CAT, -8.61% dropped more than 8% to lead Dow decliners lower after a Bank of America analyst cut his rating on the stock to underperform from neutral.
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