Wednesday's economic lowlight was a report that showed US retail sales sank a record 8.7 per cent last month,as the engine of the US economy gets locked away amid widespread stay-at-home orders to slow the spread of the virus. Industrial production across the country dropped in March by the largest percentage since 1946,while an April survey of manufacturers in New York state fell to its lowest reading on record. A measure of confidence among home builders hit its lowest level since 2012.
Treasury yields sank after the release of the reports,a sign of concern among investors about future growth in the economy. The yield on the 10-year Treasury fell to 0.63 per cent from 0.75 per cent late Tuesday.
The economic data is so dire that prices for stocks are swinging on the basic question about whether some companies will continue to exist.
"What you want to know is that the company can survive intact,"said Kelly."You need to know that the company can weather the storm."
After that,the eventual recovery will also largely depend on when and how US consumers get back to spending.
"How does this impact consumer behaviour in an economy largely driven by consumers?"asked Keith Buchanan,portfolio manager at Globalt.
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Energy stocks took the sharpest losses after oil prices touched another 18-year low. Those in the S&P 500 index fell 5.9 per cent,including an 11.3 per cent plunge for Occidental Petroleum and a 5.5 per cent drop for Exxon Mobil.
Demand for oil around the world will fall this year by a record amount amid widespread lockdowns,the International Energy Agency said Wednesday. Benchmark US crude touched its lowest price since 2002 before recovering slightly to $19.87 a barrel,down 24 cents from a day earlier. Brent crude,fell $1.91,or 6.5 per cent,to $27.69 a barrel.
Financial stocks were also among the market's biggest losers after more banks said they had to set aside billions of dollars in preparation for a coming avalanche of defaults. Bank of America fell 5.2 per cent after reporting its results,while Citigroup lost 4 per cent.
In Europe,London's FTSE 100 lost 3.3 per cent,and the DAX in Frankfurt declined 3.9 per cent. The CAC 40 in France retreated 3.8 per cent. The Nikkei 225 in Tokyo declined 0.5 per cent,and Hong Kong's Hang Seng was off 1.2 per cent.
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 per cent just a day earlier on hopes that the outbreak was levelling off in some hotspots and could lead to parts of the economy opening back up.
It capped a rally that sent the S&P 500 up 27 per cent since hitting a bottom on March 23,which got its start following massive aid promised by the Federal Reserve and US government to prop up the economy. The index is down about 17 per cent from its record high set in February.
While still jarring,the yo-yo moves of recent weeks haven't been as severe as earlier in the sell-off,when daily moves of 8 per cent and even more than 10 per cent throttled markets,as investors begin to look at what the landscape may be following the shutdowns.
"We're past the indiscriminate selling period,"said Leo Kelly,CEO of Verdence Capital Advisors."The market is trying to discover what that looks like on the other side."
President Donald Trump has been discussing how to roll back federal social distancing recommendations. US governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding.
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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.
But if the market's hopes for an upcoming reopening prove to be too optimistic,it likely sets them up for steep declines ahead.
AP