US stocks fall as grim economic news highlights coronavirus woes

Bengaluru — Wall Street’s main indexes slid 2% on Wednesday, as a dramatic drop in retail sales and dour first-quarter earnings reports lent weight to forecasts for the biggest economic slump since the Great Depression.

US retail sales plunged 8.7% in March, setting up consumer spending for its worst decline in decades, while a separate survey showed manufacturing activity in New York state plunged in April to its lowest since these records began.

Bank of America, Goldman Sachs and Citigroup fell between 2.2% and 4.6% as they joined JPMorgan Chase and Wells Fargoo in setting aside billions to cover potential loan losses tied to the coronavirus pandemic.

The banking subsector declined 5.2%, falling for the third straight day.

“Investors need a strong stomach to stick with stocks through some bad earnings reports in the coming days, weeks and months,” said David Trainer, chief executive officer of investment research firm New Constructs in Nashville, Tennessee.

“Earnings and coronavirus are tightly intertwined and the more progress there is on coronavirus, the sooner economic activity resumes and earnings rebound.”

Analysts expect earnings for S&P 500 firms to slide 12.3% in the first quarter, while the International Monetary Fund has predicted the global economy would shrink 3% in 2020, its sharpest downturn since the Great Depression.

The benchmark S&P 500 has climbed about 26% 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% from its highest.