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.
December's jobs report was weaker than expected: the economy only added 199,000 nonfarm payrolls compared to an estimate of 422,000. However, the unemployment rate hit a new pandemic-era low of 3.9%, beating expectations. One thing to consider is the fact that the impact of the COVID-19 omicron variant is not factored into these results as the read is taken around the middle of the month. So — how might the variant impact job reports over the next few months? Mark Zandi, Chief Economist at Moody's Analytics, joins Cheddar News' Closing Bell to discuss December's jobs numbers, his 2022 labor market outlook, how COVID-19 will continue to impact the labor market, and more.
Digital medical care provider Pear Therapeutics rang the closing bell on the Nasdaq Friday and President and CEO Dr. Corey McCann, joined Cheddar to talk about how the company plans to grow the business of software-based therapeutics and how the first FDA authorized prescription digital therapeutics company will go about treating illnesses like insomnia and addiction. "These really are pieces of software. In many cases, they're apps and in the cases of our addiction products, these are based on something called cognitive behavioral therapy or CBT," he said. "These products change the patient's brain circuitry to help them be abstinent, to help them stay in treatment, and that's exactly what we see in randomized clinical trials and that's what we see in the real world." He also addressed the ongoing mental health crises brought on by the pandemic. **copy updated to remove IPO information as Pear Therapeutics went public in December**
Gamestop shares were up on The Wall Street Journal report that the video game retail company plans to enter the NFT and crypto space. Adam Hollander, the founder of Hungry Wolves NFT, joined Cheddar to break down how it could be a lifeline for the struggling meme stock darling. "They're not resigning themselves to becoming the next Blockbuster story, and so while people may not be buying as many video games in a retail environment anymore, NFTs, in particular, people are starting to expect more gaming utility on the backend — at least for a variety of projects — and I personally think its a very smart move for them to do this," Hollander told Cheddar.
On Saturday, New York will join neighboring New Jersey and Connecticut in authorizing mobile sports betting. Matt Kalish, president and co-founder of Draftkings North America, joined Cheddar to talk about the landmark change that is estimated to rake in $500 million in annual tax revenue on a potential billion-dollar market. Kalish also addressed the possibility that legalized sports betting in the Empire State could cannibalize his company's revenues in the bordering states. "It's pretty inconvenient, you know, to go across the border to make a bet. And people were doing it, but I think it really stifled a lot of the opportunity," he said. "So while there's some of that going on, I think really a tremendous amount, like a giant percent, of New York will be very incremental."
James Tattersall, director of sales and marketing for Lake Nona Wave Hotel, talks about the hotel's initiatives to foster diversity and how these amenities champion inclusivity in the Orlando area.
Desmond Howard, former NFL wide receiver and Modelo college football playoff ambassador, joins Cheddar News to talk about the Modelo sweepstakes honoring the 30th anniversary of his iconic punt return.
Satoshi Island is looking to become the world's first blockchain-driven economy. James Law, the chief architect of the planned private community, joined Cheddar to discuss the vision for the potential crypto capital of the world and how it will be brought to life. For people looking to live on the island, Law said they will be able to purchase land and homes and even design their own dwellings both in real life and via the metaverse. "Satoshi Island has already been digitally scanned. We have an absolute digital twin already in our metaverse," he said. Citizenship applications are expected to be launched via NFTs, he told Cheddar.
Satellite launch service Virgin Orbit has gone public on the Nasdaq via a SPAC merger with NextGen Acquisitions with a valuation of about $3.2 billion. CEO Dan Hart joined Cheddar's "Between Bells" from in front of his LauncherOne rocket in New York City's Times Square to talk about what's next after the IPO, an upcoming "Above the Clouds" mission to deliver commercial and national security payloads, and the benefits of their rockets being launched from commercial 747 aircraft. "We can launch anywhere in the world," he said. "There are almost 80 space agencies across the world, for instance, and about 10 of them have space launch. We can give them a space flight capability overnight by taking a runway and turning it into a spaceport."
CEO Tim Cook made a staggering $98.7 million in total compensation for 2021. The majority of Cook's earnings came from stocks along with his salary of $3 million. Apple recently became the first publicly traded U.S. company to have crossed the $3 trillion valuation mark.
Tech and entertainment giant Sony appears to be getting serious about automaking. An electric concept SUV — the Vision S-02 — was unveiled at CES 2022 and is slated to be produced by a new subdivision, Sony Mobility. This comes after the company revealed the Vision S concept Sedan at CES 2020.
