Wall Street fell on Wednesday as dismal economic and first-quarter earnings reports added to renewed concerns over the extent of damage from the coronavirus outbreak.
Investors had to absorb a record 8.7% slump in retail sales across the US in March and a 5.4% slide in industrial production – the biggest fall since 1946.
The Federal Reserve said on Wednesday in its April “Beige Book” report of anecdotal information on business activity collected nationwide (ahead fo the next policy meeting of the central bank) that “economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic.”
As well another Fed survey a survey showed manufacturing activity in New York state plunged in April to its lowest level in the series’ history.
The Dow fell 445.41 points, or 1.86% to close at about 23,504.35 and the S&P 500 index lost 62.7 points, or 2.2% to end the session at 2,783.36. The Nasdaq dropped 122.56 points, or 1.44% to close at 8,393.18.
Overnight trading on the ASX 200 future market saw a loss of more than 110 points, setting up a weak start to trading this morning here.
The S&P energy sector slumped as oil prices sank after reports suggested persistent oversupply and collapsing global demand (See separate story).
The banking subsector also fell as the biggest more US banks set aside billions of dollars to prepare for an expected flood of loan defaults as the coronavirus pandemic all but halted business activity.
The day before Wall Street had ignored weak earnings reports from JPMorgan Chase and Wells Fargo and their decisions to put close to $US 10 billion into their loan loss reserves to cover expected future losses by homeowners, businesses and credit card users.
The flight from risky assets also hit Treasury yields which dipped to just over 0.63% for the 10-year security, a fall on the day of more than 11 basis points.
Shares of Bank of America and Citigroup fell as they joined JPMorgan Chase and Wells Fargo & Co in reporting a slump in first-quarter profits.
Together the quartet put close to $US20 billion into their loan loss reserves in the March quarter ahead of what they expect to be a surge in bad debts over the rest of 2020.
US electronics retailer, Best Buy announced the laying off of 51,000 hourly workers and Harley Davidson, the bike maker, also laid off staff. Retailer JV Penney, a long time struggler, was reported to be exploring bankruptcy options.
US oil stocks rose sharply to more than half a billion barrels for the first time since 2017 (See separate story) and the International Energy Agency said April would go down in the history of the energy market as “Black April” for an unprecedented 29 million barrels a day fall in demand.
Thursday’s weak start will follow Wednesday’s 21.4 point dip in the ASX 200, a drop of 0.4% where it closed at 5466.7. Thursday will be a different story with the focus on the March Labour Force data to be released at 11.30 am by the Australian Bureau of Statistics.
