Stocks slide as coronavirus slams US economy with historic declines in retail sales, manufacturing

The coronavirus is hitting the US economy harder than expected

U.S. equity markets slid Wednesday as the reality of the coronavirus hit home after economic indicators showed mounting damage from the pandemic and big banks fortified their balance sheets against loan defaults by hard-hit consumers and small businesses.

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TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES27173.96+358.52+1.34%
SP500S&P 5003298.46+51.87+1.60%
I:COMPNASDAQ COMPOSITE INDEX10913.561787+241.30+2.26%

The Dow Jones Industrial Average dropped over 445 points or 1.86 percent after falling as much as 716 points. While the S&P 500 fell 2.20 percent and Nasdaq Composite 1.4 percent. The selling snapped a four-day winning streak for the Nasdaq that lifted it out of bear-market territory on Tuesday.

Wednesday's dour economic data included retail sales, which fell by a record 8.7 percent month-over-month in March, according to the U.S. Census Bureau, a steeper drop than the 8 percent that economists surveyed by Refinitiv were expecting. Separately the Federal Reserve's Beige Book, a regional snapshot of the nation's economy, noted a sharp and abrupt contraction in April due to the coronavirus.

Meanwhile, the Empire State Manufacturing Survey for April plunged to a record low -78.2, worse than the -35 that was anticipated. The index printed at -21.5 last month. Industrial production fell 5.4 percent in March, making for the sharpest drop since 1946 when the U.S. saw a post-World War II slowdown.

Looking at stocks, the big banks remain in focus as Bank of America, Citigroup and Goldman Sachs all reported ahead of the opening bell.

Bank of America set aside $3.6 billion to bolster its balance sheet as nonperforming loans are expected to increase in the second quarter. The lender said its net income plunged 40 percent from a year ago to $4 billion, or 40 cents a share.

TickerSecurityLastChangeChange %
BACBANK OF AMERICA CORP.23.49+0.15+0.64%
GSGOLDMAN SACHS GROUP INC.194.95-0.16-0.08%
CCITIGROUP INC.42.02-0.17-0.40%

Citigroup said its first-quarter profit shrank by 46 percent to $2.52 billion as the bank set aside $4.9 billion for loan loss reserves.

Goldman Sachs reported its quarterly profit fell 49 percent to $1.12 billion as revenue held steady at $8.74 billion amid the best three months for bond trading in five years. The bank booked losses for $868 million from lending and debt investments.

TickerSecurityLastChangeChange %
UNHUNITEDHEALTH GROUP INCORPORATED302.50+9.84+3.36%
TSLATESLA INC.407.34+19.55+5.04%
JCPn.a.n.a.n.a.n.a.

Dow Jones component UnitedHealth beat on both the top and bottom lines and said its report reflects only a “minimal impact” from the COVID-19 pandemic.

The major airlines surged after reaching a deal with Treasury on a $25 billion relief package that consists of both grants and low-interest loans.

TickerSecurityLastChangeChange %
DALDELTA AIR LINES INC.29.78+0.77+2.65%
UALUNITED AIRLINES HLDG.34.20+1.46+4.46%
ALLTHE ALLSTATE CORPORATION91.28+1.30+1.44%
LUVSOUTHWEST AIRLINES CO.37.10+0.24+0.65%

Elsewhere, Tesla surged after Goldman Sachs initiated coverage with a “buy” rating and J.C. Penney plummeted after the retailer voluntarily skipped a loan payment. The retailer continues discussions with lenders as store closures due to the pandemic crush business.

West Texas Intermediate crude oil closed down 1.19 percent at $19.87 a barrel after a report showed U.S. inventories swelled by the most on record in the week ended April 10. Intraday action dropped WTI to a more than 18-year low of $19.20.

Meanwhile, gold slipped 1.68 percent to $1,727 an ounce.

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U.S. Treasurys gained, pushing the yield on the 10-year note to 0.637 percent.

In Europe, markets were lower across the board with Germany's DAX leading the decline, down 3.92 percent. Britain's FTSE and France’s CAC were weaker by 3.4 percent and 3.76 percent, respectively.

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Asian markets finished lower, with Hong Kong’s Hang Seng sliding 1.19 percent, China’s Shanghai Composite falling 0.57 percent and Japan’s Nikkei slipping 0.45 percent.