Wall Street falls as coronavirus cuts into US payrolls

The S&P 500 was down about 27 per cent from its mid-February record high, or over US$7 trillion (RM30.5 trillion) in market value, and economists have cut their forecasts for US GDP, with Morgan Stanley now predicting a 38 per cent contraction in the second quarter. — Reuters pic
The S&P 500 was down about 27 per cent from its mid-February record high, or over US$7 trillion (RM30.5 trillion) in market value, and economists have cut their forecasts for US GDP, with Morgan Stanley now predicting a 38 per cent contraction in the second quarter. — Reuters pic

NEW YORK, April 4 — Wall Street’s main indexes fell yesterday as the coronavirus abruptly ended a record US job growth streak of 113 months, leaving little doubt that the economy is in a recession.

And even the loss of 701,000 jobs that Labour Department data showed for March did not completely capture the economic carnage. The survey considered data only until mid-March, before widespread US lockdowns put more people out of work.

The worldwide spread of the virus has forced billions of people to stay indoors and pushed entire sectors to the brink of collapse, triggering mass layoffs and dramatic steps by companies to raise cash.

While relatively flat volatility indexes suggested that investors getting used to market swings, Mike Turvey, TD Ameritrade’s institutional senior trading strategist sees institutional investors taking a shorter term view with many still very cautious ahead of the weekend market close.

“This is not like December 2018. We’re not likely to see a V shaped recovery because we haven’t even begun to really tackle the main issue behind why this is happening. That’s still an ongoing process. It’s going to take time,” said Turvey.

“Everybody’s outlook has changed to very short term. The reality is that a lot of things happen over the weekend and a lot of people don’t want that exposure,”

The S&P 500 was down about 27 per cent from its mid-February record high, or over US$7 trillion (RM30.5 trillion) in market value, and economists have cut their forecasts for US GDP, with Morgan Stanley now predicting a 38 per cent contraction in the second quarter.

At 3:00PM ET, the Dow Jones Industrial Average fell 365.26 points, or 1.71 per cent, to 21,048.18, the S&P 500 lost 43.38 points, or 1.72 per cent, to 2,483.52 and the Nasdaq Composite dropped 135.09 points, or 1.8 per cent, to 7,352.22.

However the CBOE market volatility index , also known as Wall Street’s fear gauge fell 1.9 points. And while the small cap Russell 2000 index was down 4 per cent on the day the Russell volatility index was essentially flat on the day.

“You have to interpret it as a small positive. You don’t see the same reach for protection,” said TD Ameritrade’s Turvey. “The market is accepting the fact we’re going to have these 3-4 per cent swings on a regular basis.”

Of the S&P 500’s 11 major sectors utilities and financials were the biggest laggards with declines of more than 3 per cent.

Walt Disney Co shares fell 3 per cent after it said it would furlough some US employees this month, while sources said luxury retailer Neiman Marcus was stepping up preparations to seek bankruptcy protection.

Analysts expect corporate profits to fall in the upcoming earnings season, but some strategists said that actual numbers will likely be given little importance.

“There’s really very little that you can take away from (earnings) other than some insights to actually how are these businesses set up to weather the pandemic and where will they be once it begins to show signs of passing,” Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

Raytheon Technologies Corp, formed by the merger of United Technologies and Raytheon Co, shed 10.2 per cent as it pulled its 2020 outlook for its aerospace units.

Tesla Inc rose 5 per cent after the electric-car maker said production and deliveries of its Model Y sport utility vehicle were ahead of schedule.

Declining issues outnumbered advancing ones on the NYSE by a 4.50-to-1 ratio; on Nasdaq, a 3.11-to-1 ratio favoured decliners.

The S&P 500 posted no new 52-week highs and 10 new lows; the Nasdaq Composite recorded 4 new highs and 166 new lows. — Reuters

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