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U.S. equity markets slid Wednesday as two separate economic indicators showed mounting damage from the coronavirus pandemic and big banks fortified their balance sheets against loan defaults by hard-hit consumers and small businesses.
The Dow Jones Industrial Average plunged 553 points, or 2.3 percent, in the opening minutes of trading while the S&P 500 and Nasdaq Composite fell 2.5 percent and 2.3 percent, respectively. The selling has the Nasdaq on track to snap a four-day winning streak that lifted it out of bear-market territory on Tuesday.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 23316.53 | -633.23 | -2.64% |
| SP500 | S&P 500 | 2774.24 | -71.82 | -2.52% |
| I:COMP | NASDAQ COMPOSITE INDEX | 8381.323491 | -134.42 | -1.58% |
Wednesday’s dour economic data included retail sales, which fell by a record 8.7 percent month-over-month in March, according to the U.S. Census Bureau, a steeper drop than the 8 percent that economists surveyed by Refinitiv were expecting.
Meanwhile, the Empire State Manufacturing Survey for April plunged to a record low -78.2, worse than the -35 that was anticipated. The index printed at -21.5 last month.
Looking at stocks, the big banks remain in focus as Bank of America, Citigroup and Goldman Sachs all reported ahead of the opening bell.
Bank of America set aside $3.6 billion to bolster its balance sheet as nonperforming loans are expected to increase in the second quarter. The lender said its net income plunged 40 percent from a year ago to $4 billion, or 40 cents a share.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BAC | BANK OF AMERICA CORP. | 22.19 | -1.54 | -6.49% |
| GS | GOLDMAN SACHS GROUP INC. | 176.60 | -1.63 | -0.91% |
| C | CITIGROUP INC. | 43.65 | -1.77 | -3.90% |
Citigroup said its first-quarter profit shrank by 46 percent to $2.52 billion as the bank set aside $4.9 billion for loan loss reserves.
Goldman Sachs reported its quarterly profit fell 49 percent to $1.12 billion as revenue held steady at $8.74 billion amid the best three months for bond trading in five years. The bank booked losses for $868 million from lending and debt investments.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UNH | UNITEDHEALTH GROUP INCORPORATED | 273.04 | +2.54 | +0.94% |
| TSLA | TESLA INC. | 738.24 | +28.34 | +3.99% |
| JCP | J.C. PENNEY | 0.23 | -0.09 | -26.88% |
Dow Jones component UnitedHealth beat on both the top and bottom lines and said its report reflects only a “minimal impact” from the COVID-19 pandemic.
The major airlines surged after reaching a deal with Treasury on a $25 billion relief package that consists of both grants and low-interest loans.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DAL | DELTA AIR LINES INC. | 23.44 | -1.10 | -4.48% |
| UAL | UNITED AIRLINES HLDG. | 30.30 | -0.60 | -1.94% |
| ALL | THE ALLSTATE CORPORATION | 98.42 | -4.02 | -3.92% |
| LUV | SOUTHWEST AIRLINES CO. | 32.91 | -1.86 | -5.36% |
Elsewhere, Tesla surged after Goldman Sachs initiated coverage with a “buy” rating and J.C. Penney is plunging after a Reuters report said the retailer is exploring a bankruptcy filing.
Commodities were under pressure as West Texas Intermediate crude oil fell 3.1 percent to $26.55 a barrel and gold dropped 1.13 percent to $1,749 an ounce.
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U.S. Treasurys gained, pushing the yield on the 10-year note down by 8.4 basis points to 0.666 percent.
In Europe, markets were lower across the board with Germany’s DAX leading the decline, down 3.3 percent. Britain’s FTSE and France’s CAC were weaker by 2.81 percent and 3 percent, respectively.
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Asian markets finished lower with Hong Kong’s Hang Seng sliding 1.19 percent, China’s Shanghai Composite falling 0.57 percent and Japan’s Nikkei slipping 0.45 percent.
