UPDATE: Stocks fall as investors brace for earnings hit from virus

Financial, industrial and health care stocks took some of the heaviest selling. Amazon and a few other retailers were bright spots. Traders continued to watch for more signs that the coronavirus outbreak may be leveling off and what that could mean for the prospects of reopening the economy.

Cautious optimism that the outbreak has begun to plateau in some of the worst-hit areas and another big infusion of economic support by the Federal Reserve helped spur last week’s big rally. This week, stocks could be in for more volatility as companies report results for the first quarter, though analysts will be focused primarily on what management teams have to say about what the rest of the year looks like.

Details may be hard to come by, as many companies have ceased giving earnings forecasts because of the uncertainty over when government officials will determine it's safe to roll back the social distancing and stay-at-home mandates that have all but ground the economy to a halt.

“The companies don’t know what demand is going to be over the next three months or over the next six months,” said Willie Delwiche, investment strategist at Baird.

The S&P lost 28.19 points to 2,761.63. The Dow Jones Industrial Average fell 328.60 points, or 1.4%, to 23,390.77. The index had been down 624 points. The Nasdaq reversed an early slide and rose 38.85 points, or 0.5%, to 8,192.42. The Russell 2000 index of smaller company stocks lost 34.68 points, or 2.8%, to 1,212.04.

Stocks were sharply lower from the start Monday.

Banks and technology stocks accounted for much of the selling in the early going. Energy stocks held up the best as oil prices rose 4% after OPEC and other oil producing nations agreed over the weekend to cut production to reflect the collapse of demand due to the coronavirus pandemic.

What it means

Investors are bracing for a sobering first look this week at how the coronavirus has hurt corporate America, with several major banks, including JPMorgan Chase, Wells Fargo, and other big companies set to report their results for the first three months of the year. Analysts project broad declines in earnings across the 11 sectors in the S&P 500.

Bond prices fell, sending yields broadly higher. The yield on the 10-year Treasury rose to 0.74% from 0.72% late Thursday.

The Dow Jones Industrial Average was down 347.49 or 1.46% to 23,371.88.

The NASDAQ composite index was down 37.25 or .45% to 8,116.32.

The S&P 500 was down 41.50 or 1.48% to 2,749.72.

The latest on oil

The price of oil rose after major oil producers agreed to cut output as demand craters because of the slowdowns caused by the global coronavirus pandemic. European markets were closed for a holiday and Asian markets ended mostly lower. Major banks will be the first U.S. companies to report their first-quarter earnings this week, and investors will be watching closely for what they say about how the coronavirus is impacting their business.

Crude prices lost earlier gains following an agreement by OPEC and other oil producing nations to cut output to reflect the collapse of demand due to the pandemic.

Just hours before markets reopened, OPEC, Russia and other oil producers finalized an unprecedented production cut of nearly 10 million barrels, or a tenth of global supply, seeking to boost crashing prices and end a price war.

U.S. benchmark crude initially jumped more than $1 but then lost ground, and were up just 3 cents Monday morning to $22.80 per barrel. It fell $2.33, or 9.3%, to $22.76 per barrel on Thursday, before the Good Friday holiday.

Brent, the international standard for pricing, fell 27 cents to $31.21 per barrel.

The oil producers agreed in a video conference late Sunday to cut 9.7 million barrels a day beginning May 1. Mexico had initially blocked the deal. Iran’s oil minister also says several Middle Eastern nations agreed to an additional cut of 2 million barrels a day.

Analysts said the cuts were not enough to make up for the void in demand due to business and travel shutdowns due to the coronavirus. But the deal at least helped resolve a price war that took U.S. crude to near $20 per barrel, pummeling U.S. oil and gas producers.

“With a demand shock estimated at between 15 to 30 million barrels of oil a day, depending on who you talk to, it is clear that the OPEC+ agreement contains more hope than reality," Jeffrey Halley of Oanda said in a commentary.

“The entire construction is underwhelming, to say the least, and really relies on production collapsing in the U.S. and Canada to deliver the level of cuts required."

Elsewhere

Shares were mostly lower in Asia while markets in Europe were closed for the Easter holiday. Trading was muted with European markets closed the day after Easter Sunday. Markets in Hong Kong and Sydney were also closed.

In Asia, Japan’s Nikkei 225 index lost 2.3% to 19,043.40, while the Shanghai Composite index gave up 0.5% to 2,783.05. The Kospi in South Korea shed 1.9% to 1,825.76. India's Sensex slipped 1.6% to 30,654.61.

Some optimism

Comments by Dr. Anthony Fauci, the top infectious disease expert in the U.S., have raised hopes. He has said some parts of the U.S. might be able to reopen as early as next month, while warning that much remains uncertain.

China has begun, cautiously, to reopen activity in regions such as Wuhan and surrounding Hubei province that were shut down during the worst of its outbreak.

What’s next

This week will bring a slew of first quarter corporate earnings that are likely give an inkling of how badly the pandemic is battering business, though much of the damage has come since the end of March. China is due to report its first quarter GDP data on Friday.

— This report was compiled by ArLuther Lee for The Atlanta Journal-Constitution.