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.
Breakthrough Energy Catalyst, a private-public fund backed by Bill Gates, is planning to invest up to $15 billion in clean technology initiatives across the U.S., UK, and European Union. It will target four key areas and help fund large projects that otherwise would not be financially possible. Bobby Hollis, Director of Breakthrough Energy Catalyst, joins Cheddar News' Closing Bell to discuss.
Student loan collection company Navient agreed to cancel $1.7 billion in debt and paid more than $140 million in other penalties to settle a lawsuit over abusive lending practices. Josh Shapiro, the attorney general of Pennsylvania who led negotiations in the settlement, joined Cheddar to go over the details of the company's predatory lending. "What Navient would do is charge [borrowers] these exorbitantly high rates, even though they knew people couldn't pay them or they would likely default on them," he explained.
An economic development agency, the Northwest Arkansas Council, is looking to draw technology professionals to their region of the Southern state with incentives like $10,000 worth of Bitcoin and a new bicycle. Nelson Peacock, president and CEO of the private nonprofit made up of companies like Walmart and Tyson Foods, joined Cheddar to talk about the program to further power his local economy. "By offering the payment in Bitcoin, we're looking to identify those people with interest and expertise in the underlying technologies, the blockchain technologies," he said.
Stocks closed mixed Friday with big bank stocks dragging on the Dow after a few lackluster earnings reports. Both the Nasdaq and the S&P 500 gained, but overall, stocks notched a second losing week in a row to start 2022. Tom Kozlik, Head of Research and Analytics at Hilltop Securities, joins Cheddar News' Closing Bell to discuss today's close, expectations for 2022 earnings reports, whether or not the COVID-19 omicron variant is being properly priced into markets, and more.
After months of investors turning to crypto as a hedge against inflation, instead of the traditional hedge of gold, one crypto exchange is working with a token creator to launch a digital coin backed by a physical asset. GCOIN gives customers a digital title of ownership to 99.99% pure physical gold which is stored in a secured vault. Brent de Jong, GCoin's founder and Kristin Boggiano, Co-Founder and President of CrossTower, a cryptocurrency exchange, join Cheddar News' Closing Bell to discuss the GCOIN rollout, customer interest, why crypto is used as an inflation hedge, and more.
Retail platform operator and delivery company, Foxtrot,
raised $100 million in a Series C round led by D1 Capital Partners. Foxtrot bills itself as the modern convenience store that combines what it calls in-store curated discovery with 30-minute delivery and 5-minute pickup. Since launching first as a digital-only delivery service, the company has since grown into a popular local retailer, opening 16 brick and mortar locations across Chicago, Dallas, and Washington, DC. Foxtrot co-founder and CEO Michael LaVitola joined Cheddar News' Closing Bell to discuss.
As Meta and Microsoft ramp up their AR and VR tech futures, analysts have been waiting on word from Apple, but the consumer tech giant is reportedly delaying such an announcement. Doug Astrop, a managing partner at Exponential Investment Partners, joined Cheddar to dive into the rumors about the possibilities of a foray into the metaverse by Tim Cook's megacorp sometime in 2022 or 2023. "We can't really predict with a great deal of certainty how it's going to play out, but I'm confident Apple's going to be a big player and do very well in any scenario that unfolds," said Astrop.
Monster Beverage is charging into the beer and hard seltzer biz with its $330 acquisition of CANarchy Craft Brewery Collective. The energy drink finalized the deal a week after Constellation Brands Inc. made a deal with Coca-Cola to acquire the Fresca brand.
