U.S. Stocks Slump Before Earnings Season Kicks Off: Markets Wrap

These are the main moves in markets:

Stocks

• The S&P 500 decreased 2% to 2,733.20 as of 1:25 p.m. New York time.
• The MSCI Asia Pacific Index fell 0.4%.
• The MSCI Emerging Market Index declined 0.7%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%.
• The euro decreased 0.3% to $1.0906.
• The Japanese yen appreciated 0.8% to 107.60 per dollar.

Bonds

• The yield on two-year Treasuries gained one basis point to 0.23%.
• The yield on 10-year Treasuries advanced one basis point to 0.73%.
• The yield on 30-year Treasuries increased one basis point to 1.36%.

Commodities

• The Bloomberg Commodity Index dipped 0.1%.
• West Texas Intermediate crude increased 1.2% to $23.03 a barrel.
• Gold climbed 0.3% to $1,758.40 an ounce.

U.S. stocks dropped before the start of an earnings season marked by the extraordinary uncertainties caused by the coronavirus pandemic.

After its best week since 1974, the S&P 500 Index’s rally fizzled out — with all of its major groups falling on Monday. Oil pared gains as investors weighed whether an unprecedented deal by the world’s biggest producers to cut output could stabilize the market. Treasuries and the dollar slipped.

With the coronavirus pandemic sowing chaos across the world, the investment community has been lost in a fog when it comes to corporate profits. As the earnings season kicks off this week, traders might get a sense of how bad the hit to global earnings could be as the outbreak upends the global economy.

“Companies, analysts, traders, investors and strategists to some extent are ‘flying into earnings season without instruments’,” John Stoltzfus, the chief investment strategist at Oppenheimer & Co., wrote to clients. “The unprecedented nature of the economic shutdown, social distancing and sheltering in place ordered by officials provides an overhang of uncertainty.”

The S&P 500 is trading below the 2,800 level — a major support line in 2019 that served as resistance the prior year. With one of the most uncertain earnings periods on record kicking off this week, there may be few catalysts to push stocks higher.

“We’re in for a tough year,” said Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Corp. in a Bloomberg Television interview. Earnings are going to be down “by about 30%,” she added.

In focus this week:

• U.S. banks and financial firms begin reporting first-quarter earnings, led by JPMorgan, Citigroup, Bank of America, BlackRock, Goldman Sachs and Wells Fargo.
• Bank Indonesia rate decision and briefing Tuesday
• South Korea holds parliamentary elections and the Bank of Canada has a rate decision Wednesday
• Also Wednesday, U.S. retail sales are poised to fall in March by the most ever seen
• China releases GDP, industrial production and retail sales and jobless figures Friday