The Dow Jones Industrial Average nosedived 700 points on collapsing prices of oil on Tuesday, as the stock market advance succumbed to extreme pressure caused by the pandemic.
Wall Street backpedaled for a second consecutive day on Tuesday as a crash in US crude prices and glum outlook by refiners foreshadowed the worst economic crisis since the Great Depression as a result of the coronavirus crisis.
Stocks of IBM and Travelers came in mixed on earnings results. Tech companies Apple and Microsoft were down 3.2 percent and 4.1 percent, respectively. Netflix fell 1.3 percent ahead of its earnings report after the final bell. Amazon, on the other hand, dropped 2.8 percent despite an analyst price-target hike.
Most of the major S&P 500 sub-sectors plunged over 2 percent, with the energy index dipping for the seventh time in eight sessions one day after the West Texas Intermediate contract fell below zero for the first time in history as oil traders ran out of storage facilities for May deliveries.
Despite the gloomy atmosphere, slowing new cases of the virus as well as progress on additional federal funding for businesses helped to ease losses.
Tech stocks were among the heavily battered, as the tech-heavy NASDAQ plummeted 3.1 percent to lead the downside. Volume was higher on the NASDAQ and lower on the NYSE against the same time, Monday.
A historic crash in oil prices made a huge impact on sentiment as investors feared that depleting demand for the commodity would cripple a major industry for U.S. jobs and investment and usher in a flattened world economy.
Tuesday's results come a day after WTI crude for May delivery fell $55.90 per barrel, or 306 percent, to settle in the red zone for the first time ever.
Although the energy landscape is quite small compared with the general market as a whole, huge drops can drag down risk sentiment and trigger doubts about defaults in the oil and gas market, adding to the possibility of a recessionary climate caused by the health crisis.
With the crash of futures contracts bleeding into June, investors became cautious of the scale of the economic harm caused by unprecedented lockout policies that have frozen economic activity and triggered millions of unemployment.
During the past month, US jobless claims reached 22 million as companies introduced drastic cost-saving steps to tackle the downturn, and scores of US business activity polls are likely to plunge to recession-era lows. The Finance Index dropped almost 3 percent as risk flight sent investors scrambling to perceived safe-haven nets of bonds and the US currency.
