In this March 25, 2020 file photo, a closed sign hangs in the window of a shop in Portsmouth, N.H., due to coronavirus concerns. (AP Photo/Charles Krupa, File)
Stocks swung back down Wednesday after more signs piled up of the economic damage being caused by the coronavirus outbreak.
Markets have been stuck cycling between fear and budding optimism in recent weeks as investors try to guess how long and deep the looming recession will be, with the switch often flipping overnight or even within the same day. Economists have been slashing their forecasts in preparation for what they say may be the worst downturn since the Great Depression, but several reports that came out Wednesday were even more dismal than expected.
Retail sales sank a record 8.7% last month as lockdowns around the country to slow the spread of the virus closed stores and kept people at home. A separate survey of business conditions for manufacturers in New York state plunged to its lowest level in history, by a wide margin. Industrial production across the country also failed to meet economists’ already low expectations.
Stocks around the world and Treasury yields were already down in early Wednesday trading, and their drops accelerated after the release of the reports. Lower yields are a sign that demand for relatively safe investments like U.S. government bonds is increasing.
The S&P 500 was down 2.4% after the first half-hour of trading. The Dow Jones Industrial Average fell 494 points, or 2.1%, to 23,455, and the Nasdaq was down 1.9%.
Energy stocks took the sharpest losses after oil prices plunged to another 18-year low. Those in the S&P 500 index fell 5.8%.
Demand for oil around the world will fall this year by a record amount, the International Energy Agency said Wednesday. Benchmark U.S. crude touched its lowest price since 2002 before recovering slightly to $20.14 a barrel, little changed from a day earlier. Brent crude, the international standard, fell $1.27 to $28.30.
Earlier, the International Monetary Fund said this year's global economic output will shrink by 3%, a bigger loss than 2009's 0.1% decline during the financial crisis. That was a sharp reversal from the Fund's January forecast of 3.3% growth before the virus prompted governments to shut down factories, travel and other industries.
“The IMF forecast a deep economic winter," said Hayaki Narita of Mizuho Bank in a report. Narita said.
In Europe, London's FTSE 100 lost 2.5%, and the DAX in Frankfurt declined 3.2%. The CAC 40 in France retreated 2.9% to 4,437. The Nikkei 225 in Tokyo declined 0.5%, and Hong Kong's Hang Seng was off 1.2%.
Investors are focusing on how and when authorities may begin to ease business shutdowns and limits on people’s movements imposed to slow the spread of the coronavirus. The S&P 500 had jumped 3.1% just a day earlier in hopes that the outbreak was leveling off in some hotspots and could lead to parts of the economy opening back up.
U.S. President Donald Trump has been discussing how to roll back federal social distancing recommendations. U.S. governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding.
China has reopened factories, shops and other businesses after declaring victory over the outbreak but forecasters say it will take months for industries to return to normal output, while exporters will face depressed global demand.
Art Hogan, Chief Market Strategist at National Securities, joined Cheddar News' Closing Bell, where he says investors are taking a wait-and-see approach when it comes to the situation between Russia and the Ukraine and elaborates on the impact higher oil prices stemming from the conflict would have on the market.
Kyle Jaeger, senior editor for Marijuana Moment, joined Cheddar News' Closing Bell, where he explains why a stigma still exists for the cannabis industry in advertising and social media after NBC rejected Weedmaps' ad for the big game even though more states across the country are legalizing cannabis.
A bipartisan bill introduced by U.S. Senators Amy Klobuchar (D-MN) and Cynthia Lummis (R-WY) aims to tackle the spread of misinformation on social media platforms, as well as the addictive nature of the sites and negative mental health impacts they have on users. The 'Nudge Act' would require studies to find and compile potential interventions that platforms could use to encourage people to think before they share a post, or log off after spending too much time on an app. The FTC would create rules based on these findings, and hold the platforms accountable. But will it work? Jesse Lehrich, co-founder of Accountable Tech, joins Closing Bell to discuss the bill, whether real results and regulations could come from it, and more.
We know that the Los Angeles Rams emerged as Super Bowl champions, but the crypto industry also came out a winner on Sunday with several notable companies getting airtime in primetime. However, Richard Smith, author of the Risk Rituals Newsletter, joins Cheddar News' Closing Bell, where he says the campaigns were a 'disappointment' and adds that crypto companies would be wiser spending their resources on creating value.
A.I.-based entertainment company, Deedub, recently raised
$20 million in a Series A round, led by Insight Partners. Deepdub uses A.I. technology to automate the dubbing process for foreign-language movies or TV shows, while using actors' original voices. The company says it can take just two to three minutes of data from an actor's voice and transform the voice into a different language. The funding comes as foreign-language films and shows like Netflix's 'Squid Game' have recently become more popular with audiences in the U.S. and around the world. Oz Krakowski, Chief Revenue Officer at Deepdub, joins Cheddar News' Closing Bell to discuss.
Energy Vault, the company developing sustainable, grid-scale energy storage solutions, is now trading on the New York Stock Exchange following the completion of its business combination with Novus Capital Corporation II. Energy Vault develops sustainable, grid-scale energy storage solutions designed to advance the transition to a carbon free, resilient power grid. Robert Piconi, co-founder and CEO of Energy Vault, joins Cheddar News' Closing Bell to disucss.
A new mobile app has launched just in time for Valentine's Day. Our.Love bills itself as an A.I.-powered, gamified, relationship wellness app for couples. The app is set in what the company calls the Coupleverse, a virtual world where each couple can build a virtual relationship home as they also build their real-world relationship. Founder and CEO Tal Zlotnitsky joined Cheddar to discuss how the app works. "The concept behind Our.Love is to give people the opportunity to understand where they stand in their relationship through very simple metrics that we provide within the app that will help them in real-time, see where they stand, see where their partner is, and be able to get closer together," he said.
