US open: Stocks head south amid slew of data and earnings
US stocks headed south at the bell on Wednesday as concerns about how long the coronavirus lockdown will last and what its after-effects may be, as well as some disappointing data and earnings, weighed on sentiment.
As of 1535 BST, the Dow Jones Industrial Average was down 2.72% at 23,298.21, while the S&P 500 was 2.70% softer at 2,769.14 and the Nasdaq Composite came out the gate 1.94% weaker at 8,350.17.
The Dow opened 651.55 points lower on Wednesday after closing higher in the previous session as market participants seemingly grew more optimistic regarding the Covid-19 pandemic as corporate earnings season kicked off.
While news that the pandemic was easing drove stocks higher in the previous session, with Donald Trump stating he believes certain states would be able to lift the strict social distancing measures that have strained their economies before the end of April, some dismal earnings from US companies were now spooking investors.
Bank of America posted a 45% decline first-quarter profit and braced for big loan losses as a result of the Covid-19 pandemic, while Citigroup and Goldman Sachs both posted sharply lower profits.
However, insurer United Health beat quarterly profit estimates and maintained its 2020 outlook despite the pandemic.
Also in focus were comments from the International Monetary Fund, which warned on Tuesday that the economic recession which will follow the "Great Lockdown" will be the steepest in a century. The IMF caution also sent West Texas Intermediate back below $20 a barrel.
On the data front, despite wider-than-usual daily swings last week, mortgage rates dropped to their lowest level in the history of the Mortgage Bankers Association’s weekly survey.
Total mortgage application volume rose 7.3% last week from the previous week, while the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $510,400 or less decreased to 3.45% from 3.49%.
Elsewhere, retail sales in the US fell at a record pace in March as the coronavirus pandemic swept across the country.
According to the Department of Commerce, in seasonally adjusted terms, retail sales volumes shrank at a month-on-month pace of 8.7% to reach $483.07bn (consensus: -6.0%). That left retail sales 6.2% below their year-ago levels.
Also from the Department of Commerce, business inventories fell in February amid a decline in imports and further decreases are likely as the novel coronavirus outbreak severely disrupts global supply chains and the flow of goods. Commerce said that business inventories decreased 0.4% in February after falling 0.3% in January.
Still on data, industrial production fell sharply in March as the coronavirus pandemic disrupted supply chains and knocked down demand for an array of goods and services.
Industrial production, a measure of factory, mining and utility output, decreased a seasonally adjusted 5.4% in March from the prior month, the Federal Reserve said Wednesday.
Lastly, manufacturing in the state of New York and some of the surrounding areas was battered as the region was hit by the Covid-19.
Throughout 2019, factories in the region had largely been spared from the fallout of the US-China trade war, but now it was the opposite case, with the region having become the epicentre of the virus outbreak in the States.
The Federal Reserve Bank of New York'sEmpire State manufacturing index tumbled from a reading of -21.5 for March to -78.2 in April, far surpassing the drop to -30.0 anticipated by economists.
The Fed's Beige Book will also be published at 1900 BST.