United States stocks opened lower on Monday as investors brace for dismal quarterly earnings reports this week that could offer more clarity on how badly corporate profits have been damaged as the coronavirus pandemic ravages the global economy.
The Dow Jones Industrial Average dipped 232.82 points or 0.98 percent to 23,486.55 in the early minutes of trading in New York. The S&P 500 index- a gauge for the performance of US retirement and college savings plans - slipped 0.90 percent while the Nasdaq Composite Index traded 0.25 percent lower.
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Major US Banks like JPMorgan Chase & Co and Wells Fargo & Co will kick off the earnings season on Tuesday. Analysts expect first-quarter earnings at S&P 500 firms to fall 9 percent compared with a January 1 forecast of a 6.3 percent rise, according to IBES data from Refinitiv.
Goldman Sachs estimates for global growth continue to spiral downward, with analysts now seeing a second-quarter decline of 11 percent year-on-year for advanced economies and roughly 35 percent quarter-on-quarter annualised, the bank wrote in a note to investors.
And with US jobless claims topping a jaw-dropping 16 million in the three weeks to April 4 and 42 US states imposing strict lockdown or stay-home orders, investors will be searching for answers as to where the country is headed in the second quarter.
“This is already causing a labor market implosion,” Goldman Sachs researchers wrote on Monday. “So far, the silver lining is that most job losses are coming in the form of temporary layoffs and that federal unemployment benefits have been raised sharply, but the separation of workers from their jobs is nevertheless dramatic.”
Another thing investors are keeping their eye on is oil.
On Sunday, the Organization of Petroleum Exporting Countries and its allies, a grouping known as OPEC+, agreed to their biggest-ever output cut to salvage a collapsing market that has lost two-thirds in value since January.
Despite the historic deal, crude prices were subdued on Monday over concerns that the cut would not be enough to offset the glut and as coronavirus outbreak continues to hammer demand.
“Although OPEC+ decided to reduce output by some 10 million bpd, cuts of such levels are not enough to bring back healthier price levels and were only sufficient to maintain prices largely unchanged,” Rystad Energy’s Oil Markets team wrote in an email.
If the G20 will join in on additional cuts there could be a relative price recovery.
“Still, due to the stock build that April will have accumulated by then, prices will not recover this year to pre-COVID-19 levels, even in a more balanced market,” Rystad Energy’s Oil Markets team wrote in an email.
Shares of Exxon Mobil Corp were up a fraction of a percent, while Chevron Corp stock was more than 1 percent higher in mid-morning trading.
Shares of Gilead Sciences Inc were up more than 1 percent after the latest data showed an improvement in the condition of more than two-thirds of severely ill COVID-19 patients following treatment with the drugmaker's experimental drug.
On Sunday evening, US President Donald Trump retweeted a call for the firing of the country's top infectious disease expert, Dr Anthony Fauci, after he told CNN that earlier mitigation efforts would have saved lives.
