Stocks dropped on Wednesday as weak economic data and disappointing bank earnings dragged the major averages lower. Retail sales in March fell 8.7% — the most on record — while the latest reading from the Empire State Index showed that manufacturing in the New York area hit a record low reading of -78.2. Meanwhile, as earnings season gets underway investors are getting their first glimpse of the coronavirus' economic toll.
This is a live blog. Here's the latest:
10:44 am: March economy was even worse than Wall Street expected
Economists could reduce already negative forecasts for first quarter GDP after March retail sales fell by 8.7% in the worst drop on record and New York manufacturing activity plunged the most ever. The retail sales number was even more dire than the 8% expected, after a revised 0.4% decline in February. Food and beverage stores showed gains of more than 25%, but most categories showed steep declines. Empire state manufacturing was a shocking negative 78.2, double the anticipated decline. MUFG Union Bank chief financial economist Chris Rupkey said it shows "the economy is clearly in ruins here" and April will be worse. Economists expect the economic decline to trough in the second quarter, as the economic shutdown did not really start until the final weeks of the first quarter, in the second half of March. – Domm
10:36 am: Occidental Petroleum down 8% after saying it will pay Berkshire dividend with $200 million in equity
The stock price of international oil and gas company Occidental Petroleum fell more than 11% in early trading on Wednesday after the company said it will pay its quarterly dividend to Berkshire Hathaway in equity. Occidental said in a filing that it will sell 17.3 million OXY shares to Berkshire Hathaway worth $200 million as part of dividends owed to Warren Buffett's conglomerate. Berkshire in 2019 agreed to a $10 billion preferred stock investment in Occidental as part of its takeover of Anadarko Petroleum, an offer that sweetened the bid at the time. The funding came at a steep price, however, with the preferred stock accruing dividends to Berkshire at 8% annually. — Franck
10:26 am: Analysts see buying opportunities in stocks like Tesla and Netflix ahead of their earnings reports
- Goldman Sachs initiated Tesla as buy.
- BMO upgraded Target to outperform from market perform.
- Pivotal raised its price target on Netflix to $490 from $425.
- Morgan Stanley upgraded JD.com to overweight from equal weight.
- Piper Sandler upgraded Campbell Soup to overweight from neutral.
- Piper Sandler upgraded General Mills to overweight from neutral.
- Baird raised its target price on Amazon to $2,550 from $2,275.
- Jefferies downgraded Visa and Mastercard to hold from buy.
- DA Davidson upgraded Canada Goose to buy from neutral.
- Loop downgraded American Eagle to sell from hold.
- Citi initiated Lennar, D.R. Horton and PulteGroup as buy.
CNBC PRO subscribers can read more here. – Bloom
10:24 am: Stocks extend losses, Dow down more than 650 points
Stocks accelerated their losses in early trading, with the Dow Jones Industrial Average dropping more than 650 points. The S&P 500 slid 2.9% while the Nasdaq Composite traded 2.2% lower. — Fitzgerald
10:21 am: JPMorgan on retail sales: "All the toilet paper in the world can't clean up this report"
The coronavirus fallout continued after retail sales plunged on Wednesday. "Today's number is one of the first 'hard data' reports on aggregate demand in March and reveals the scale of the economic damage wrought by the pandemic last month," the firm added after retail sales dropped a record 8.7%. —Bloom
10:20 am: Wall Street reportedly tries to fix stock market 'circuit breakers' after historic sell-off
A group of financial firms including Morgan Stanley and BlackRock are in the middle of brainstorming potential changes to the stock market's so-called "circuit breakers" after being repeatedly triggered during the monster coronavirus sell-off last month, the Wall Street Journal reported. A marketwide trading halt occurs at three thresholds on the S&P 500 to prevent stocks from falling through the floor. These Wall Street firms are aiming to find a solution to make the halts less likely to occur right after the opening bell, which happened in March, the Journal said. One suggestion calls for relaxing the circuit-breaker rule between 9:30 a.m. and 9:45 a.m ET. The discussion came after complaints about the effectiveness of the mandate and its potential to trigger more panic selling. —Li
10:16 am: Homebuilder confidence index takes biggest one-month dive in its history as coronavirus slams economy
Homebuilder sentiment suffered its biggest monthly drop in the index's 35-year history this month, as the coronavirus pandemic hammered the American economy. Builder confidence in the market for single-family homes plunged 42 points to a reading of 30 in April, the lowest point since June 2012, according to the latest National Association of Homebuilders/Wells Fargo Housing Market Index, or HMI. The survey dates back to January 1985. The reading was expected to drop to 55. Anything above 50 is considered positive. The last negative reading was in June 2014. – Olick
10:02 am: Americans are spending their coronavirus stimulus checks on food, gas and paying back friends
New data shows the government's coronavirus stimulus checks are providing much-needed relief to Americans struggling with day-to-day living costs.
Data compiled by digital bank Current found members who received stimulus payments over the past five days spent 16% of the money on food, including takeout and delivery. An additional 9% of spending was on groceries and 10% went toward gas. "Clearly food is an issue, people are struggling," Current CEO Stuart Sopp told CNBC. "They're just trying to survive, and I think that's what the stimulus was all about." – Schulze
9:30 am: Stocks open in the red, Dow falls more than 500 points
Stocks moved lower at open on Wednesday as weak economic data and bank earnings that missed Street estimates dragged the major averages lower. The Dow dropped 532 points, for a loss of 2.2%. The S&P 500 was down 2.3%, while the Nasdaq Composite shed 1.9%. The drop all but erases Tuesday's surge. – Stevens
9:19 am: 2-year Treasury yield falls to 7-year low after record declines in retail, manufacturing measures
Treasury yields plunged on Wednesday as the latest economic data underscored the coronavirus' devastating blow to the U.S. economy. The two-year yield hit a low of 0.199%, its lowest level since July 2012. U.S. retail sales for March dropped the most since the government started tracking the series, while manufacturing in the New York area fell by its biggest margin ever to a historic low. The yield on the benchmark 10-year Treasury note dropped 6 basis points to 0.67%, after the rate hit an all-time low of 0.318% in early March amid a historic flight to bonds. – Li
9:17 am: Best Buy to furlough about 51,000 employees as its stores remain closed to customers
Best Buy will furlough about 51,000 employees later this week, the company said in a news release. The retailer's stores have been closed across the country since March 22, but it has continued to offer curbside pickup. The company said its online sales in the U.S. are up more than 250%, and about half of those sales are picked up at its stores. Shares of Best Buy slid more than 4% during Wednesday's premarket. – Repko, Stevens
9:03 am: Behind March's record drop in retail sales
U.S. retail sales for the month of March fell 8.7%, the largest drop on record going back to 1967. Economists had been expecting a drop of 8%. To put the number in context, the second worst reading in history was a 6.46% drop in Jan. 1987. With the majority of Americans staying home in an effort to slow the spread of the coronavirus, clothing and accessories sales fell 50.5% month-over-month, while furniture and home furnishing sales dropped 26.8%. Unsurprisingly, one bright spot was food and beverage sales, which rose 25.6%. – Stevens, Rattner
8:53 am: Goldman's profit tumbled 46%, but bank posts strongest bond-trading results in 5 years
Goldman Sachs on Wednesday said first quarter profit dropped 46% as the coronavirus pandemic wiped out results in its asset management division. The bank said it earned $1.21 billion in the quarter, or $3.11 a share, missing the $3.35 estimate of analysts surveyed by Refinitiv. While results were dragged down by losses in debt and equity holdings housed in the asset management business, the firm's trading division exceeded expectations, helping company-wide revenue of $8.74 billion top the $7.92 billion estimate. Goldman shares slipped 3.3% in premarket trading. – Son
8:46 am: New York manufacturing hits record low reading at -78.2
Manufacturing in the New York area has fallen far more than it did during the depths of the Great Recession, with the Empire State Index for April coming in at -78.2. Economists surveyed by Dow Jones had been expecting -32.5. The survey was conducted between April 2 and April 10. — Pound
8:35 am: US retail sales for March plunged a record 8.7%
U.S. retail sales for the month of March fell 8.7%, the largest drop on record going back to 1967. Economists had been expecting a drop of 8%. The Dow is now set to open 475 points lower. – Stevens
8:30 am: Coronavirus update
Global cases of the coronavirus have reached nearly two million with 1,996,681 infections, according to Johns Hopkins University. About 127,590 people have died from COVID-19 around the world. In the U.S., 609,685 people have contracted the fast-spreading virus and more than 26,000 Americans have died.
On Tuesday, President Donald Trump announced that he is going to withdraw U.S. funding for the World Health Organization. He has accused the organization of making mistakes in its approach to the virus. However, some have criticized the White House for what they see as an inadequate response to the crisis. – Fitzgerald
8:28 am: Citigroup's first-quarter profit tumbles 46% as it sets aside more money for loan losses
Citigroup reported Wednesday a sharp drop in its first-quarter profit as the bank built its loan-loss reserves to cushion the blow from the coronavirus outbreak on its business. The bank earned $1.05 per share, down from the $1.87 earned in the same quarter a year earlier. Revenue rose 12% year-over-year to $20.7 billion, due to higher fixed income and equity markets trading revenue.
Wall Street had anticipated earnings per share of $1.04 on revenue of $19 billion based on Refinitiv consensus estimates. However, it's difficult to compare reported earnings to analyst estimates for Citigroup, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess. Citigroup shares fell 3.1% in the premarket. – Imbert, Stevens
8:17 am: Oil drops to lowest level since 2002 as IEA predicts crude demand will hit 25-year low in April
U.S. oil fell to its lowest level in more than 18 years following the International Energy Agency's monthly oil market report, which predicts that demand for crude in April will drop 29 million barrels per day year-over-year. The widely followed report said that April's demand level could be the lowest since 1995, while forecasting that global oil demand will fall by 9.3 million bpd for the full year. The coronavirus pandemic has wreaked havoc on the oil market, sapping demand as worldwide travel slows and businesses shutter their doors. West Texas Intermediate, the U.S. benchmark, dropped to $19.20, its lowest level since Feb. 1, 2002 following the report. The contract later pared some of those losses and traded 2.3% lower at $19.65. Brent crude, the international benchmark, fell 3.7%, or $1.09, to trade at $28.51 per barrel. – Stevens
7:59 am: Airlines jump after reaching aid agreement with Treasury Department
Shares of major airline companies surged in premarket trading on Wednesday after the companies reached deals for portions of $25 billion in payroll grants to help weather the coronavirus. American and United Airlines jumped 9.5% and 7.5%, respectively, while Delta and Southwest both rose more than 6%. The relief program requires that airlines not furlough or cut employees' pay rates through Sept. 30. The grants were part of the more than $2 trillion coronavirus relief package. – Li
7:44 am: Bank of America profit slides due to expected coronavirus losses
Bank of America reported quarterly profit that disappointed Wall Street, sending shares down 2.3% in premarket trading. The second largest bank by deposits in the U.S. said it earned 40 cents a share, down 45% as BAC set aside $3.6 billion for anticipated loan losses due to the coronavirus pandemic. Analysts had been looking for 46 cents a share. Revenue of $22.8 billion was roughly in line with estimates, while trading volume easily beat estimates. – Cox
7:36 am: Trump says some states could 'reopen' before May
President Donald Trump said Tuesday evening that he believes some states will be able to lift social distancing rules and "reopen" their economies by the end of April. Trump said he "will be speaking to all 50 governors very shortly" and "will then be authorizing each individual governor of each individual state to implement a reopening." His announcement came a day after the president claimed "total" authority over when to lift state-imposed coronavirus public health safety measures. Though many congressional lawmakers are eager to alleviate the economic pain caused by forced business closures in their states, public health officials warn that to ease rules now could yield a rebound in new COVID-19 cases in the U.S. — Franck
7:35 am: Tesla shares jump on Goldman buy rating
Tesla traded 6.2% higher after an analyst at Goldman Sachs initiated the electric car maker with a buy rating and a price target of $864 per share. "We are positive on Tesla because we believe that the company has a signiﬁcant product lead in EVs, which is a market where we expect long-term secular growth," Goldman Sachs auto analyst Mark Delaney said in a note to clients. —Fitzgerald, Imbert
7:23 am: Stock futures point to losses at the open
U.S. stock index futures traded lower and indicated losses at the open as investors digest the latest earnings reports. The Dow Jones Industrial Average was set for a more than 300 point decline, or 1.3%, while the S&P 500 and Nasdaq-100 were slated to drop 1.5% and 0.9%, respectively.
Stocks rose on Tuesday as traders eyed optimistic comments from New York Gov. Andrew Cuomo about containment of the virus in the state, which is the epicenter of the outbreak in the U.S.
But the first look at bank earnings — from JPMorgan and Wells Fargo — did give the Street a taste of what could be to come as earnings season gets underway and companies begin to reveal the toll of the virus. – Stevens
– CNBC's Yun Li, Maggie Fitzgerald, Jesse Pound, Hugh Son, Nate Rattner, Melissa Repko, Elizabeth Schulze, Michael Bloom, Patti Domm and Jeff Cox contributed reporting.
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