Coronavirus – Wall Street sees red after historic collapse of black gold
As a result of a major economic slowdown resulting from the coronavirus pandemic, the fall in oil prices is spectacular.
The New York Stock Exchange ended in sharp decline on Monday in the wake of an unprecedented plunge in New York oil prices, whose contract for delivery next month ended in negative territory.
Wall Street’s flagship index, the Dow Jones Industrial Average, fell 2.44% to 23,650.44 points.
The highly technological Nasdaq lost 1.03% to 8,560.73 points and the S&P 500, which represents the 500 largest companies on Wall Street, fell 1.79% to 2 823.16 points.
The New York market, which remained on two consecutive weekly increases, folded under the effect of the collapse of the prices of the barrel of West Texas Intermediate (WTI) for delivery in May, whose contract expires on Tuesday.
Reference to New York, it finished at -37.63 dollars, which means that investors are ready to pay to get rid of it, due to lack of storage and facing the anemia of demand for black gold caused by the coronavirus crisis.
“Exceptionally low oil prices are a sign of weak economic activity,” said Peter Cardillo of Spartan Capital Securities.
“This is a sign that we are in a period of deflation,” said Cardillo, recalling the series of recent catastrophic indicators for the US economy, including the boom in jobless claims.
Unsurprisingly, the oil majors are among the stocks that suffered the most on the stock market on Monday: Occidental fell by 7.6%, Chevron by 4.1% and Exxon Mobil by 4.7%.
But the energy sector is far from being the only one to suffer the shock, several big names on the New York coast like the aircraft manufacturer Boeing (-6.8%) or the bank JPMorgan Chase (-3.7%) also having very strongly folded.
No vote on Monday
Investors also seemed impatient that there was no compromise between the White House and Congress on a second wave of loans to American small and medium-sized businesses devastated by the coronavirus crisis.
Despite declarations by Democratic and Republican officials over the weekend favorable to the release of new funds for SMEs, the initial 349 billion having already been fully distributed, no vote was scheduled for Monday.
On the bond market, the 10-year rate on the US debt fell to 0.6148%, compared to 0.6417% at the last closing.
Among the stocks, Halliburton gained 0.7%. The oil services group has announced that it will cut spending significantly to deal with plummeting oil prices.
United Airlines dropped 4.4%. Like its main competitors, the airline announced a heavy operating loss in the 1st quarter, in the order of $ 2.1 billion, stating that it had $ 6 billion in cash as of April 16.
Disney lost 4.1%. According to the Financial Times, the group will suspend the payment of wages to 100,000 employees, nearly half of its global workforce, this week to save $ 500 million and limit the financial impact of the pandemic crisis.