US stocks fall as oil crash adds to pandemic fears

New York — Wall Street tumbled for a second straight day on Tuesday as a collapse in US oil prices and glum forecasts by companies foreshadowed the worst economic slump since the Great Depression.

All 11 S&P 500 sector indexes fell 1.5% or more, with energy sliding for the seventh time in eight sessions a day after the WTI contract crashed below zero as oil traders ran out of storage for May deliveries.

With the collapse spilling into June futures contracts, equity investors became wary of the extent of the economic damage from sweeping lockdown measures that have halted business activity and sparked millions of layoffs.

The S&P information technology index drop 2.9%, while the financial index falls 3.2%. After many companies pulled their forecasts because of uncertainty related to the coronavirus, investors will focus in the coming days on first-quarter reports for signs of how badly the pandemic is hurting US corporations.

The benchmark S&P 500 index has climbed over 20% from its March low, powered by trillions of dollars in stimulus, but it remain nearly 20% below its February record high due to fears of devastating economic damage caused by the coronavirus.

“When are countries and states going to reopen their economies, and what does that even mean? I’d expect us to see choppy days like this until we get some visibility and figure this out, but that’s going to be a while,” warned Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

US jobless claims hit 22-million in the past month as companies launched dramatic cost-saving measures to ride out the slump, and readings of US business activity surveys, due on Thursday, are likely to plummet to recession-era lows.

Coca-Cola provided the latest evidence of the damage wrought by the global health crisis, saying its current-quarter results would take a severe hit from low demand for its soft drinks.

Travelers Companies, the first of the big US insurers to report results, reported a 25% fall in quarterly profit, hurt by higher catastrophe losses, but its shares rose 0.6%.

IBM declined 3.7% after the company withdrew its 2020 annual forecast late on Monday.

Chip industry bellwether Texas Instruments fell 3% and streaming service provider Netflix  dropped 0.3% ahead of their quarterly reports after market close.

At 2.25pm, the Dow Jones Industrial Average was down 1.9% at 23,200.63 points, while the S&P 500 lost 2.26% to 2,759.31. The Nasdaq Composite dropped 2.32% to 8,361.71.

Reuters