U.S. stocks slumped Monday afternoon 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, -1.82% fell 510 points, or 2.2%, to 23,207, while the S&P 500 SPX, -1.53% dropped 1.9% to 2,736. The Nasdaq Composite COMP, -0.44% was off 0.8% at 8,089.
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 biggest issue facing the market is when will the economy be opened back up,” said Kent Engelke, chief economic strategist at Capitol Securities Management, in an interview with MarketWatch. “The longer we wait, the greater the damage.”
Yet, Engelke said he’s feeling optimistic about reports of several vaccines in the works and the potential for the economy to start reopening next month, even through quarterly earnings are kicking off under the cloud of the coronavirus.
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, +0.65% was last up around 1.2%.
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.
New York Gov. Andrew Cuomo on Monday said the “worst is over,” even as the death toll from COVID-19 in the hard-hit state topped 10,056. 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
President Donald Trump on Monday also said he’d soon make a decision “in conjunction” with governors and other officials on reopening states. 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.
Also read:Trump reposts tweet calling for firing of Dr. Fauci
The number of COVID-19 cases around the world rose to 1.87 million on Monday, while the number of fatalities rose to 116.052, 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 known cases at 558,526 and the most deaths at 22,146. 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, +3.33% were up 2%, while Dow component Exxon Mobil Corp. XOM, -0.84% was down 1.6% and fellow blue-chip Chevron Corp. CVX, +1.74% rose 1.5%.
- Oil-field-services company Baker Hughes Co. BKR, +3.30% saw shares rise 1.9% 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, -8.13% 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.
- Shares of 1-800-FLOWERS.com fell 11.6% after D.A. Davidson analysts downgraded the company to neutral from buy and slashed their price target to $14 from $26.
- Amazon.com Inc. AMZN, +4.91% shares rallied 4.6% in afternoon trade, after the e-commerce and cloud giant said it was hiring 75,000 more employees, in addition to the 100,000 it already hired, to help meet increased demand.
How are other markets trading?
In precious metals, gold for June delivery GCM20, +0.52% on Comex edged up by $7.7, or 0.5%, to $1,760.80 an ounce, finding support as investors eyed losses in the stock market and weighed expectations for further moves by central banks and fiscal policy makers to boost the global economy.
Asian stocks traded lower, with Japan’s Nikkei 225 index NIK, -2.33% down 2.3% to end at 19,058.15. The Shanghai Composite index SHCOMP, -0.48% gave up 0.5% to close at 2,782.08, while the Kospi 180721, -1.87% in South Korea shed 1.4% to finish at 1,883.69. European markets were closed for Easter Monday.
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