Wall Street falls after gloomy economic data, bank earnings

Wall Street falls after gloomy economic data, bank earnings

The New York Stock Exchange (NYSE)
FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan in New York City. REUTERS/Andrew Kelly

NEW YORK: US stocks fell on Wednesday (Apr 15) as dismal economic and first-quarter earnings reports compounded concerns over the extent of damage from the coronavirus outbreak.

The S&P energy sector slumped as oil prices sank after reports suggested persistent oversupply and collapsing global demand.

The banking sub-sector fell as the biggest US lenders set aside billions of dollars to prepare for an expected flood of loan defaults as the coronavirus pandemic all but halted business activity. The flight from risky assets also hit Treasury yields.

Shares of Bank of America and Citigroup Inc dropped as they joined JPMorgan Chase & Co and Wells Fargo & Co in reporting a slump in first-quarter profits.

In further evidence of economic damage from the outbreak, US retail sales plunged 8.7 per cent in March, manufacturing output dropped by the most in over 74 years and a survey showed manufacturing activity in New York state plunged in April to its lowest in the series' history.

Disappointing bank earnings are weighing on sentiment as well as prospects for the rest of the earnings season, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

In the coming weeks, "it's going to be more important to look at companies ... from a debt perspective" in addition to sales and earnings, he said, noting: "I'm not sure the recovery is going to be as strong as everybody is saying."

Analysts expect earnings for firms on the benchmark S&P 500 index to slide 12.8 per cent in the first quarter, while the International Monetary Fund has predicted the global economy would this year witness its sharpest slump since the 1930s.

The Dow Jones Industrial Average fell 445.41 points (1.86 per cent) to 23,504.35, the S&P 500 lost 62.70 points (2.20 per cent) to 2,783.36 and the Nasdaq Composite dropped 122.56 points (1.44 per cent), to 8,393.18.

The S&P 500 has climbed about 26 per cent from its March trough, lifted by a raft of US monetary and fiscal stimulus and on early signs that coronavirus cases were peaking in some hotspots, but the index is still down about 18 per cent from its record high.

The CBOE volatility index rose after closing on Tuesday at its lowest level since Mar 5. The S&P tech sector fell 2.1 per cent and was the biggest drag on the benchmark index.

J.C. Penney Co Inc slumped as sources said the retailer was exploring filing for bankruptcy protection after the virus outbreak upended its turnaround plans.

The biggest US health insurer UnitedHealth Group Inc rose as it maintained its 2020 profit outlook at a time when major companies have withdrawn forecasts due to the coronavirus pandemic.

Declining issues outnumbered advancing ones on the NYSE by a 4.96-to-1 ratio; on Nasdaq, a 3.12-to-1 ratio favored decliners.

The S&P 500 posted eight new 52-week highs and one new lows; the Nasdaq Composite recorded 22 new highs and 24 new lows.

Source: Reuters