US open: Stocks head south as oil sell-off enters second day
US stocks opened lower for a second straight session on Tuesday as this week's historic oil sell-off showed no signs of slowing down.
As of 1535 BST, the Dow Jones Industrial Average was down 1.70% at 23,249.44, while the S&P 500 was 1.82% weaker at 2,771.64 and the Nasdaq Composite started out the session 1.80% softer at 8,406.83.
The Dow opened 401.00 points lower on Tuesday following a near 600 point drop in the previous session as a sharp decline in US crude oil prices raised questions about just how deep this quarter's economic slowdown will be.
Market participants remain focussed on the strange happenings with oil once again on Tuesday after May contracts for oil futures fell to a negative price - meaning producers would actually pay for someone to take the oil from them. June futures were also down almost 20% at $16.44 a barrel.
Donald Trump told the Secretaries of Energy and Treasury to put together a plan aimed at making financial relief available to US oil and gas developers in order to secure the future of the "very important companies and jobs".
IG analyst Chris Beauchamp said: "Oil's rout continues to command all the attention in global markets, as investors move on from the Covid-19 crisis to the complete breakdown of normality in one of the world economy’s most vital components. While the May contract is now banished to the history books, it looks like the June contract is going the same way, falling below $20 and then taking out $19 and $18 in short order for WTI, while Brent crude has met the same fate.
"We are witnessing markets finally play catch-up to the reality on the ground in the oil market – huge oversupply and non-existent demand have combined with nearly-full storage facilities to drive complete dislocation in the crude oil market. And this is being felt in stock markets too, which could not long remain indifferent to the chaos."
Also weighing on sentiment was news that the US Senate had failed to reach a deal on a second stimulus package aimed at saving the economy and health care system that has been ravaged by the global pandemic.
In the corporate space, IBM shares were down after the tech giant posted a 3.4% hit to revenues in the first quarter.
Coca-Cola shares were down after warning of a "material" second-quarter impact as a result of the Covid-19 pandemic, while shares in tobacco giant Phillip Morris were also down after the group withdrew its full-year 2020 guidance due to the outbreak.
Netflix will report earnings after the close.
On the macro front, US home sales dropped more in March than they had in nearly four and a half years as extraordinary measures to curb the spread of Covid-19 brought buyer traffic to a virtual standstill.
The National Association of Realtors said existing home sales tumbled 8.5% to a seasonally adjusted annual rate of 5.27 million units last month.