Major Wall Street indices fell 2% on Wednesday as record retail sales declines and sluggish reports on first quarter earnings bolstered forecasts of the biggest economic recession since the Great Depression .
Retail sales in the United States fell 8.7% in March, setting consumer spending for its worst decline in decades, while separate survey found manufacturing activity in New State York plunged in April to its lowest level in the history of the series.
Bank of America, Goldman Sachs Group Inc and Citigroup Inc fell between 2.2% and 4.6% as they joined JPMorgan Chase & Co and Wells Fargo & Co to set aside billions to cover potential credit losses linked to the coronavirus pandemic.
The banking sub-sector fell 5.2%, falling for the third day in a row.
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“Investors need a strong stomach to hold onto stocks due to poor earnings reports in the days, weeks and months to come,” said David Trainer, chief executive officer of the research firm of New Constructs investment in Nashville, Tennessee.
“Profits and coronaviruses are closely linked and the more progress there is on coronaviruses, the sooner economic activity picks up and profits rebound.”
Analysts expect S&P 500 corporate profits to drop 12.3% in the first quarter, while the International Monetary Fund predicted that the world economy would shrink 3% in 2020, its worst slowdown since Great Depression.
The S&P 500 benchmark rose about 26% from its March low, supported by a series of US monetary and fiscal stimulus and by the first signs that coronavirus cases were peaking in some areas hot, but the index is still down about 18% from its all-time high.
Major indications surged Tuesday, hoping the Trump administration could move to ease the locks. However, New York later sharply increased its official death toll from the virus to over 10,000.
“Overall, it looks like we are approaching a V-shaped recovery at the moment, but it is clearly difficult to disentangle the impact of the authorities’ extraordinary support,” said Jim Reid, strategist at Deutsche Bank . .
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At 10:07 a.m.ET, the Dow Jones Industrial Average lost 558.11 points, or 2.33%, to 23,391.65, the S&P 500 lost 71.28 points, or 2.50%, to 2,774.78. The Nasdaq Composite lost 178.63 points, or 2.10%, to 8,337.11.
J.C. Penney Co Inc. fell 25.7%, sources said the retailer was considering filing for bankruptcy protection after the virus epidemic disrupted its recovery plans.
The largest US health insurer UnitedHealth Group Inc increased 2.8% as it maintained its profit outlook for 2020 at a time when large companies have withdrawn their forecasts due to the coronavirus pandemic.
Energy stocks fell 5.5%, the highest among the S&P sectors, as oil prices fell after reports suggested persistent oversupply and a collapse in global demand.
Falling emissions outnumbered the advancers by 11.89: 1 on the NYSE and 6.69: 1 on the Nasdaq.
The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded four new highs and nine new lows.