Dow sheds nearly 500 points as stocks retreat as coronavirus hits earnings, economic data

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U.S. stocks lost ground on early Wednesday, erasing a chunk of the previous session’s gains, as investors faced an onslaught of disappointing corporate earnings and weaker-than-expected economic data resulting from the COVID-19 pandemic.

What are major indexes doing?

The Dow Jones Industrial Average
DJIA,
-2.61%

fell 472 points, or 2%, to 23,478. The Nasdaq Composite
COMP,
-2.08%

fell 138 points, or 1.6%, to 8,378. The S&P 500
SPX,
-2.68%

slumped 58 points, or 2%, to 2,789.

The Dow on Tuesday rose 558.99 points, or 2.4%, to end at 23,949.76, while the S&P 500 finished 84.43 points higher, up 3.1%, at 2,846.06. The Nasdaq Composite Index  rose 323.32 points or 4%, ending at 8,515.74.

Read:The S&P 500 just posted the most daily swings of 3% or greater in more than a decade

What’s driving the market?

U.S. and European equities stumbled on Wednesday as investors waited for corporate earnings to gauge the impact of the coronavirus pandemic. E.U. and U.S. federal officials are planning to lift restrictions to help revive their economies, but earnings reports may provide a clearer picture of how the pandemic is affecting business with the global economy headed for a deep recession according to the IMF on Tuesday.

“While many governments are working towards ending lockdown measures, investors are more attentive to the time schedule with which companies may return to catch up with profits,” said Pierre Veyret, technical analyst at ActivTrades, in a note.

Johnson & Johnson
JNJ,
-1.30%

, JPMorgan Chase & Co.
JPM,
-4.55%

and Wells Fargo & Co.
WFC,
-4.92%

offered a mixed picture Tuesday, with Goldman Sachs Group Inc.
GS,
-2.08%

, Citigroup Inc.
CITI,
+1.47%

and Bank of America Corp.
BAC,
-6.30%

reporting Wednesday.

Bank of America fell 5%, after the money center bank reported a first-quarter profit that fell below expectations, amid a $3.6 billion COVID-19-related reserve build, while revenue topped forecasts. Citigroup’s shares dropped nearly 3% after its first-quarter profit tumbled 46%.

Another fall in crude oil prices also pressured energy stocks on Wednesday after the IEA forecast a record fall in demand.

Airline stocks were up sharply though after several U.S. airlines late Tuesday reached an agreement with the U.S. Treasury for billions in grants and loans aimed at helping them to stay afloat during the coronavirus pandemic.

Investors received further evidence of the early hit to the U.S. economy with March retail sales shrinking 8.7%. Economists surveyed by MarketWatch, on average, had forecast a 7.1% monthly fall in sales. Industrial production fell 5.4% last month, its worst drop since Jan. 1946.

U.S. industrial production fell 5.4% in March, the steepest decline since early 1946 as a result of the coronavirus pandemic, the Federal Reserve said Wednesday.

In other data, the April New York Empire State Index dropped to a record low of negative 78.2 in April from negative 21.5 in the previous month.

“The bottom line is that the sharp decline in sales in March was the leading edge of what will undoubtedly be a challenging period for much of the retail sector. There will be winners and losers as households adjust their daily lives to ride out the storm and recalibrate their spending habits accordingly,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors.

The Federal Reserve’s so-called beige book report, a compilation of anecdotes on economic activity, is due at 2 p.m. Eastern.

See:Stocks rally as investors ask the ‘wrong question’ about coronavirus and reopening the economy, analyst says

Which companies are in focus?

Earnings season continues Wednesday, with shares of Bank of America Corp.
BAC,
-6.30%

off more than 5% after showing a sharp drop in first-quarter profits. Big banks JPMorgan Chase & Co.
JPM,
-4.55%

and Wells Fargo & Co.
WFC,
-4.92%

kicked off earnings season on Tuesday.

Airline shares were in focus after the biggest carriers reached an agreement in principle with the federal government on financial assistance aimed at averting layoffs in the hard-hit industry. Shares of Delta Air Lines Inc.
DAL,
-1.86%

rose 1.5%, while United Airlines Holdings Inc.
UAL,
+0.25%

rose 2.7% and American Airlines Group
AAL,
-0.62%

jumped 3%.

Also see:Airlines say deal on bailout includes provisions for government ownership

UnitedHealth Group
UNH,
+2.29%
,
the biggest U.S. health insurer and a Dow constituent, reported a fall in quarterly profit, but its shares rose 2.4% as it maintained its 2020 profit outlook at a time when major companies have withdrawn forecasts due to the coronavirus pandemic.

Oil majors Exxon Mobil Corp
XOM,
-5.44%

and Chevron
CVX,
-4.42%

slipped about 5% as oil prices tumbled, pressured by reports suggesting persistent oversupply and collapsing global demand.

How are other markets trading?

The swoon in global equities spurred inflows into government paper, with the yield on the 10-year Treasury note yield
TMUBMUSD10Y,
0.652%

down nearly 9 basis points to 0.66%.

Crude oil prices added to their drop Wednesday. West Texas Intermediate Crude for May
CLK20,
-0.54%

fell below $20 a barrel on the New York Mercantile Exchange. In precious metals, the price of an ounce of June gold
GCM20,
-0.93%

fell 1.3% to 1,745.20 an ounce.

The U.S. dollar gained 0.9% against its major rivals, according to the U.S. dollar index.
DXY,
+1.00%

The STOXX 600 Europe index
SXXP,
-2.75%

was down 2.6% on Wednesday, while Asian markets recorded modest losses.



Source : MTV