Stocks tumble again as oil slide continues
Stocks on Wall Street fell for a second straight day, as global markets retreated and oil prices continued their record slide.
The S&P 500 dropped about 3 percent on Tuesday, its biggest daily decline in three weeks. Major European markets were 3 percent to 4 percent lower.
The two-day slump is yet another shift in sentiment for the stock market as it searches for a clear path forward during the coronavirus crisis.
In recent weeks, the S&P 500 soared more than 25 percent, reto covering roughly half its losses from a plunge in late February and early March. Investor spirits were lifted by a federal rescue package and promises by the Federal Reserve that it stood willing to pump trillions into the financial markets.
Early signals that pace of growth in COVID-19 infections was slowing also buoyed the spirits of investors, suggesting the appearance of a dim light at the end of a tumultuous tunnel for the economy.
But periodically fresh evidence of the scale of the downturn — more than 20 million jobs have disappeared in the United States in four weeks — has pierced the bubble and returned investors’ focus to the sheer size of the recession.
The red flags have come in the form prominent forecasts about collapsing corporate earnings, or a contraction in gross domestic product that would have been unthinkable before the outbreak. (Goldman Sachs expects the economy to shrink at an annualized pace of 34 percent in the second quarter.)
This week, it came from the oil markets, as the price of one oil benchmark dipped below zero for the first time, meaning some holders were ready to pay people to take a barrel off their hands.
“Every so often, reality bites,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Conn. “You could not ignore what was going on in the oil markets.”
The unnerving inversion in oil prices reflected an economy in free-fall, disappearing demand for petroleum and the fact that there are few places left to store all the crude still being pumped.
On Tuesday the sell-off in oil continued, with the most closely watched price for oil in the United States, for a futures contract stipulating delivery of West Texas Intermediate crude in June, plunged $11.69 a barrel, well away from negative territory but still down by nearly half. Brent crude, the global benchmark, also cratered.
Shares of some oil producers, however, rose Tuesday after President Donald Trump said on Twitter that he was asking administration officials to “formulate a plan that will make funds available” to help the industry.
Among the latest earnings reports from big companies, Snap, the maker of Snapchat, on Tuesday reported quarterly revenue of $462 million, up 44 percent from the same quarter last year. Its losses were $306 million.