AP Business Writer
Stocks fell broadly on Wall Street in morning trading Monday, erasing some of the market’s gains after its best week since 1974.
The selling came as investors weighed a pact by OPEC, Russia and other oil-producing nations to cut output in hopes of stemming a slide in crude prices following a collapse in demand due to the coronavirus pandemic. Traders were also bracing for a sobering first look this week at how the outbreak has hurt corporate America. JPMorgan Chase, Johnson & Johnson and other big companies are set to begin reporting their results for the first quarter.
The S&P 500 was down 1.8% as of 11:28 a.m. Eastern time. It surged 12% last week. Banks, technology and health care stocks accounted for much of the selling in the early going.
Energy stocks held up the best as oil prices rose 2.3% following the decision by OPEC and other oil producers over the weekend to cut production by nearly 10 million barrels a day, or a tenth of global supply, beginning May 1.
Analysts said the cuts were not enough to make up for the void in demand due to business and travel shutdowns due to the coronavirus. But the deal at least helped resolve a price war that took U.S. crude to near $20 per barrel, pummeling U.S. oil and gas producers.
“With a demand shock estimated at between 15 to 30 million barrels of oil a day, depending on who you talk to, it is clear that the OPEC+ agreement contains more hope than reality,” Jeffrey Halley of Oanda said in a commentary.
“The entire construction is underwhelming, to say the least, and really relies on production collapsing in the U.S. and Canada to deliver the level of cuts required.”
U.S. benchmark crude initially jumped more than $1 but then lost ground. It was up 53 cents Monday morning to $23.31 a barrel. It fell $2.33, or 9.3%, to $22.76 a barrel on Thursday, before the Good Friday holiday.
Brent, the international standard, rose 24 cents to $31.72 a barrel.
The Dow Jones Industrial Average was down 515 points, or 2.2%, to 23,195. The Nasdaq fell 1.1%. European markets were closed the day after Easter Sunday, while Asian markets ended mostly lower.
Bond prices were little changed. The yield on the 10-year Treasury held at 0.72%.
Wall Street closed out its best week in 45 years on Thursday, thanks to unprecedented efforts by the Federal Reserve to support the economy through the coronavirus crisis.
That, combined with a $2 trillion economic rescue plan enacted at the end of March, has helped the market regain some lost ground in recent weeks. The S&P 500 is up 5.7% so far this month, though it remains down 15.4% for the year.
The closure of businesses and mandates for people to stay home in hopes of stemming the spread of the outbreak have forced a record number of Americans out of work and raised the possibility that many businesses could end up bankrupt. That has many investors bracing for what may be the worst recession since the Great Depression.
Investors have been focused on the trajectory of the coronavirus for clues as to how pronounced the economic fallout will be. Last week, signs that the outbreak was maybe reaching a plateau in New York and other hard-hit parts of the world helped lift stocks, but the overall data show the number of new cases continues to increase.
There are more than 1.86 million confirmed cases worldwide, led by the United States with more than 557,000, according to a tally by Johns Hopkins University.
For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.
Investors and analysts are looking ahead, trying to gauge when shutdowns in many countries might ease now that the number of deaths and new cases is falling or leveling off in some of the hardest-hit regions.
Comments by Dr. Anthony Fauci, the top infectious disease expert in the U.S., have raised hopes. He has said some parts of the U.S. might be able to reopen as early as next month, while warning that much remains uncertain.
China has begun, cautiously, to reopen activity in regions such as Wuhan and surrounding Hubei province that were shut down during the worst of its outbreak.
Investors will begin to get some details this week about how much damage the economic fallout of the coronavirus is having on Corporate America.
Several major banks, including JPMorgan Chase, Wells Fargo, Citibank and Bank of America are due to report their first-quarter results this week. Other big companies, including UnitedHealth Group, Johnson & Johnson and Rite Aid are also on deck to report results this week. Analysts project broad declines in earnings across the 11 sectors in the S&P 500.