Wednesday April 1st

1-04-2020

Dow futures fall 700 points as Trump warns of ‘very painful two weeks’

U.S. stock index futures dropped early Wednesday morning and pointed to sizable declines at the open, following the end of the worst first quarter on record for the Dow and S&P 500 spurred by the coronavirus sell-off. At around 8:21 a.m. ET, Dow Jones Industrial Average futures were down 775 points, indicating an opening loss of about 813 points. S&P 500 and Nasdaq-100 futures were down 3.4% and 2.8%, respectively. President Donald Trump said Tuesday evening the U.S. should prepare for a “very, very painful two weeks” from the rampant coronavirus. White House officials are projecting between 100,000 and 240,000 virus deaths in the U.S. “This is going to be a rough two-week period,” Trump said at a White House press conference. “When you look at night the kind of death that has been caused by this invisible enemy, it’s incredible.” Data from ADP and Moody’s Analytics showed U.S. companies cut 27,000 jobs through March 12. Actual losses for the month were far worse, as shown by the record number of jobless claims in the week or March 20. Markit Manufacturing PMI and ISM manufacturing index for March will also be released on Wednesday. On Tuesday, the Dow fell 410 points or 1.8%, while the S&P 500 lost 1.6%. The Dow secured its worst first-quarter performance ever, losing more than 23% of its value in the first three months of 2020. The 30-stock benchmark had its worst quarter since 1987. The S&P 500 fell 20% in the first quarter, its worst first quarter ever and its biggest quarterly loss since 2008. The Nasdaq fell more than 14% in the first quarter. DoubleLine Capital CEO Jeffrey Gundlach said that the coronavirus driven market rout will worsen again in April, taking out the March low. “The low we hit in the middle of March … I would bet that low will get taken out,” Gundlach said in an investor webcast on Tuesday. “The market has really made it back to a resistance zone. ... Take out the low of march and then we’ll get a more enduring low.” The coronavirus pandemic has caused a nationwide shutdown of the economy, halting business production and leaving millions of American workers unemployed. The unprecedented societal disruption has caused financial distress and volatility never seen before, ultimately causing the wort first quarter in history for both the Dow and the S&P 500. “The quarter will be remembered as the fastest and greatest drop in the stock Market for the start of any post-war bear market,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “This reflects the fact that this Bear is the only one cause by a recession which was simply ‘proclaimed’ as leaders announced they were essential shutting down the economy. Since a recession was ensured, the Bear skipped all its normal foreplay and simply went right to the end fully reflecting a recession almost immediately.” U.S. oil experienced its worst month and quarter in history, losing more than 66% of its value in the first three months of the year. Demand has evaporated due to the coronavirus outbreak and a price war between Saudi Arabia and Russia. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CNN that he is starting to see “glimmers” that social distancing is helping to lessen the spread of the coronavirus. Meanwhile, U.S. cases of the fast-spreading virus have topped 177,000, according to Johns Hopkins University. The death roll from the virus in America has surpassed 3,400. Wall Street also posted sharp losses for the month. The Dow and S&P 500 fell 13.7% and 12.5%, respectively, in March for their worst one-month declines since the 2008 financial crisis. However, stocks have managed to rally towards the end of month. Investors are hoping the market has bottomed, with many strategists expecting a “V” shaped recovery, a sharp drop in GDP in the second quarter and a swift snapback in the third quarter. The so-called bond king Gundlach called those estimates “highly, highly optimistic.” Stocks in Asia were lower on Wednesday as a private survey showed Chinese manufacturing activity expanding slightly in March. In Japan, the Nikkei 225 led losses among the region’s major markets as it dropped 4.5% to close at 18,065.41. The Topix index shed 3.7% to end its trading day at 1,351.08. Mainland Chinese stocks shed earlier gains to close lower, with the Shanghai composite down 0.57% to about 2,734.52 while the Shenzhen composite slipped 0.351% to around 1,660.08. The Hang Seng index in Hong Kong declined more than 2%, as of its final hour of trading. Elsewhere, South Korea’s Kospi fell 3.94% to close at 1,685.46. Global crude prices fell on Wednesday as a bigger-than-expected rise in U.S. inventories and a widening rift within OPEC heightened oversupply fears. Oil prices are near their lowest since 2002 amid the global coronavirus crisis that has brought a worldwide economic slowdown and slashed oil demand. Crude futures ended the quarter down nearly 70% after record losses in March. Brent crude was down $1.17, or 4.44%, to trade at $25.18 per barrel. U.S. West Texas Intermediate crude fell 19 cents, or 0.9%, to trade at $20.28 per barrel. Gold jumped more than 1.5% on Wednesday as concerns the near global lockdown to fight the coronavirus pandemic would spark a deep economic downturn prompted investors to seek safe havens. Spot gold was up 1.1% at $1,587.61 per ounce, rebounding from a 3.1% slump in the last session. U.S. gold futures gained 0.4% to $1,603.60.