(Reuters) – The Dow Jones Industrial Average fell more than 900 points on Wednesday as a plunge in new orders for U.S.-made goods and a dire warning on U.S. death toll from the coronavirus pushed investors away from stocks to safer assets.
The blue-chip Dow and the S&P 500 were set to extend losses after suffering their worst first quarter as U.S. President Donald Trump warned Americans of a “painful” two weeks ahead, with health officials modeling an enormous jump in virus-related deaths.
The flight to safety pushed longer-term yields on U.S. Treasuries lower, putting pressure on interest-sensitive bank stocks .SPXBK, which fell 7%. The financials sector .SPSY was among the biggest drags on the S&P 500. [US/]
“People are concerned with the economic reality of both the depth as well as the duration of what this episode will be for the global economy,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management in North Carolina.
“There is room for further downside and we are still advocating for caution.”
S&P 500 companies have lost about $6.7 trillion in market value so far this year despite an unprecedented round of fiscal and monetary stimulus to thwart a recession.
Goldman Sachs now expects sequential real U.S. GDP to plummet 34% in the second quarter on an annualized basis.
Meanwhile, the collapse in oil prices claimed its first major casualty, with shale producer Whiting Petroleum (WLL.N) filing for Chapter 11 bankruptcy protection. Its shares nearly halved in value.
The energy sector .SPNY shed another 6%, with experts now saying oil prices could touch single digits, exacerbated by a share tussle among top producers as the world runs out of storage space.
Shares of airlines and cruise operators fell further with United Airlines (UAL.O) and Carnival Corp (CCL.N) plunging 18%, making them the biggest decliners on the S&P 500.
At 13:00 p.m. ET, the Dow Jones Industrial Average .DJI was down 919.95 points, or 4.20%, at 20,997.21, the S&P 500 .SPX was down 113.37 points, or 4.39%, at 2,471.22. The Nasdaq Composite .IXIC was down 303.22 points, or 3.94%, at 7,396.88.
With the quarterly earnings season set to begin in two weeks, S&P 500 firms are expected to enter an earnings recession in 2020, falling 3.7% in the first quarter and 9.6% in the second.
However, some analysts expressed optimism.
“This will take some time to overcome, but markets will rise in the second quarter on expectations of economic data sharply improving in the second half of 2020,” said Barry Bannister, head of institutional equity strategy at Stifel Financial in Baltimore.
Declining issues outnumbered advancers for a 10.95-to-1 ratio on the NYSE and a 7.05-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 11 new lows, while the Nasdaq recorded seven new highs and 53 new lows.
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