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George Ma
April 22 08:16

Wall Street is down over oil collapse and pandemic fear

U.S. stock indices declined on Tuesday for the second consecutive day due to a sharp drop in U.S. oil prices and pessimistic corporate forecasts that portend the worst economic downturn since the Great Depression amid a coronavirus pandemic.
By 23:18 SGT, the Dow Jones Industrial Average index had fallen 2.62% to 23,030.54, the S&P 500 index had fallen by 3.18% to 2,733.40 and the Nasdaq Composite index had fallen by 4.02% to 8,216.51.
Almost all major sub-sectors of S&P 500 are losing more than 1%, while the energy index which rose only during one of the last eight sessions is also declining. On Monday, the price of WTI futures for American oil fell below zero for the first time in history.
On Tuesday, May futures for WTI again dropped to negative figures after falling almost to -US$40 in the previous session due to fears that the U.S. will run out of storage capacity.
Edward Moya from OANDA thinks that the record oil collapse had a limited impact on U.S. stocks on Monday, but this will not happen in the future.
"With US storage tanks likely to get topped off within a month, too many negative drivers remain in place for anyone to start to have a constructive view with oil prices in the coming weeks," said Moya
S&P 500 index rose more than 25% thanks to government stimulus measures worth trillions of dollars, but still remains almost 17% below its record high as many countries have closed borders and introduced quarantine to try to stop the coronavirus from spreading.
During the four weeks ending April 11, the number of applications for unemployment benefits in the U.S. has reached 22 million and analysts predict that their number will increase by 5 million. It is expected that April data on production activity in the U.S. which will also be released on Thursday will fall to levels typical of an era of recession.
Financial index fell by 1.9% as investors were looking for security by investing in bonds and the US dollar.
Coca-Cola Co (NYSE:KO) said it expects a significant negative performance this quarter as restaurants, cinemas and other venues, which account for about half of the company's revenue, remain closed due to the coronavirus pandemic.