Wall Street slides as investors brace for dour earnings
By Medha Singh and Akanksha Rana (Reuters) - U.S. stock markets slipped in subdued trading on Monday after a strong rally last week, as corporate America launches into what is expected to be a painful quarterly earnings season due to the coronavirus pandemic. The S&P banking subsector shed 3.8% despite a rise in Treasury yields, as JPMorgan Chase & Co and Wells Fargo & Co prepared to kick off the reporting season on Tuesday, with analysts expecting a bleak outlook for the year
By Medha Singh and Akanksha Rana
(Reuters) - U.S. stock markets slipped in subdued trading on Monday after a strong rally last week, as corporate America launches into what is expected to be a painful quarterly earnings season due to the coronavirus pandemic.
The S&P banking subsector shed 3.8% despite a rise in Treasury yields, as JPMorgan Chase & Co and Wells Fargo & Co prepared to kick off the reporting season on Tuesday, with analysts expecting a bleak outlook for the year.
Earnings for S&P 500 firms are expected to tumble 10.2% in the first quarter, compared with a Jan. 1 forecast of a 6.3% rise, before plummeting 22.4% in the second quarter as sweeping lockdowns halt business activity and spark furloughs.
"This week will be somewhat of an inkblot test," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp in New York.
"There are multiple ways to read the state of play as earnings roll out, is the downturn fully priced in or is there cause for more downward pressure?"
The S&P 500 has recovered about 24% since hitting a three-year low in March, powered by aggressive U.S. monetary and fiscal stimulus and early signs of a potential peaking in U.S. coronavirus cases, but remains about 19% below its mid-February record high.
A staggering 16 million Americans have filed for jobless claims in the three weeks to April 4 and economists expect U.S. unemployment spiking to Depression-era levels in coming weeks as entire sectors shut down to try and contain the pandemic.
New York Governor Andrew Cuomo said on Monday he believed "the worst is over" as hospitalizations appeared to be reaching a plateau in the worst hit U.S. state, adding that he would announce a coordinated plan on reopening businesses.
"More than likely, this will be a slow, rolling re-opening of the economy and with the threat of new flare-ups of the virus, policymakers will likely be more cautious than courageous in reversing current guidelines," said Peter Cecchini, global chief market strategist at Cantor Fitzgerald in New York.
At 12:58 p.m. ET, the Dow Jones Industrial Average was down 499.61 points, or 2.11%, at 23,219.76, the S&P 500 was down 51.39 points, or 1.84%, at 2,738.43. The Nasdaq Composite was down 61.20 points, or 0.75%, at 8,092.37.
The small-cap Russell 2000 index fell 3.1%.
Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings tumbled between 7.4% and 14.4% as the U.S. Centers for Disease Control and Prevention extended its "no sail order" for all cruise ships.
Ford Motor Co shed 5.6% after the carmaker projected quarterly adjusted loss before interest and taxes to be about $600 million, compared with a profit of $2.4 billion a year earlier.
Caterpillar Inc tumbled 8.6% after Bank of America Global Research downgraded the heavy equipment maker to "underperform".
On a brighter note, Amazon.com Inc gained 4.4% as the retail giant said it would hire 75,000 more people amid a surge in demand for online orders.
Market participants expect a mixed session and thin trading volumes, as European markets remained shut for Easter Monday.
Declining issues outnumbered advancers more than 3-to-1 on the NYSE and 2-to-1 on the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 11 new highs and nine new lows.
(Reporting by Medha Singh and Akanksha Rana in Bengaluru; Editing by Sagarika Jaisinghani, Sriraj Kalluvila and Shounak Dasgupta)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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