S&P rallies, but cannot build off last week’s big gains

Stocks fell on Wall Street on Monday, erasing some of the market’s big gains from last week, as investors braced for a sobering first look at how the coronavirus pandemic has hurt company earnings.

The S&P 500 fell 1% after cutting its early losses by more than half toward the end of the day. The benchmark index surged 12% last week, its best gain since 1974.

The pullback followed news over the weekend that OPEC, Russia and other oil producing nations have agreed to cut output in a bid to stem a slide in crude prices following a collapse in demand due to the outbreak.

Financial, industrial and health care stocks took some of the heaviest selling. Amazon and a few other retailers were bright spots. Traders continued to watch for more signs that the coronavirus outbreak may be leveling off and what that could mean for the prospects of reopening the economy.

Cautious optimism that the outbreak has begun to plateau in some of the worst-hit areas and another big infusion of economic support by the Federal Reserve helped spur last week’s big rally. This week, stocks could be in for more volatility as companies report first quarter results, though analysts will be focused primarily on what management teams have to say about what the rest of the year looks like.

Details may be hard to come by, as many companies have ceased giving earnings forecasts because of the uncertainty over when government officials will determine it’s safe to roll back the social distancing and stay-at-home mandates.

“The companies don’t know what demand is going to be over the next three months or over the next six months,” said Willie Delwiche, investment strategist at Baird.

The S&P lost 28.19 points to 2,761.63. The Dow Jones Industrial Average fell 328.60 points, or 1.4%, to 23,390.77. The index had been down 624 points. The Nasdaq reversed an early slide and rose 38.85 points, or 0.5%, to 8,192.42. The Russell 2000 index of smaller company stocks lost 34.68 points, or 2.8%, to 1,212.04.

European markets were closed for a holiday, and Asian markets ended mostly lower.

Bond prices fell. The yield on the 10-year Treasury to 0.75% from 0.72% late Thursday. U.S. markets were closed last Friday for the Good Friday holiday.

Several major banks, including JPMorgan Chase, Wells Fargo and Bank of America, and big companies, including UnitedHealth Group, Johnson & Johnson and Rite Aid, are on deck to report results this week.

Analysts predict that earnings for all the companies in the S&P 500 will be down 9% in the first quarter from a year earlier, according to FactSet. That would be the biggest annual decline in earnings for the index since the third quarter of 2009 when earnings slumped nearly 16%.

“Our view is its one big write-off year,” said Keith Lerner, chief market strategist at SunTrust Advisory Services.