Stocks extend losses, Dow now down more than 600 points

Stocks fell sharply on Wednesday as dismal economic data and weak bank earnings fueled concerns over the coronavirus’ impact on the U.S. economy.

The Dow Jones Industrial Average dropped 658 points, or 2.8%. The S&P 500 slid 2.9% while the Nasdaq Composite traded 2.2% lower.

Bank of America traded more than 5% lower on the back of disappointing earnings. Goldman Sachs and Citigroup both fell more than 4%. Energy and financials were the worst-performing sectors in the S&P 500, dropping more than 4% each.

Retail sales during the month of March plunged a record 8.7%, according to a report from the Commerce Department published Wednesday. That was the largest one-month decline since the department began tracking the series in 1992.

Grocery stores, pharmacies and other retailers of essential goods saw a surge in demand last month amid the outbreak, the government said. But sales at a variety of other businesses — such as gas stations, auto dealerships, and restaurants — swooned as state governments shuttered commerce in an effort to slow the virus.

Manufacturing in the New York area also slumped by its biggest margin ever to a historic low, surpassing the levels seen in the throes of the Great Recession. The Empire State Manufacturing Index hit -78.2, blowing past the prior worst reading the index had seen of -34.3 during the financial crisis.

“This points to a very severe recession because this is just the beginning of a series,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The consumer’s not spending.”

“What does that mean for the market? I think it means we may have a short-term top here,” Cardillo added.

Banks, among the first major companies to report first-quarter results, gave an early look at the damage the coronavirus downturn is set to do to corporate earnings. The major banks have all reported 40%-plus declines in earnings as they set aside billions to cover what they see as major upcoming losses on loans, credit cards and mortgages.

Bank of America said its first-quarter profit fell 45% as its loan-loss reserves grew by $3.6 billion because of the coronavirus outbreak. Goldman Sachs shares dipped more than 3% after the bank reported a 46% decline in first-quarter profit as the coronavirus whacked performance in its asset-management division. Citigroup, too, said it saw first-quarter income slide 46% as it set more funds aside to protect itself from potential missed payments from borrowers and other loan holders.

President Donald Trump said Tuesday that he believes some states will be able to lift the strict social distancing measures that have strained their economies before the end of April.

“The plans to reopen the country are close to being finalized,” Trump said at a press briefing on the virus in the Rose Garden. “The day will be very close because certain states as you know are in a much different condition and are in a much different place than other states. It’s going to be very very close. Maybe even before the date of May 1st,” he said.

New York Gov. Andrew Cuomo’s optimistic tone about the outbreak in his state, the epicenter of the pandemic in the United States, also boosted investor sentiment. He said Tuesday deaths related to the virus in the state are leveling off.

“The bending of the virus curve simultaneously across this country and around the globe has brought widespread and serious national conversations about restarting the economy,” Leuthold Group’s chief investment strategist Jim Paulsen told CNBC. “For a crisis whose primary tagline for investors was ‘that is completely unknown,’ this is perhaps the first time there is some semblance of clarity as to a timeline for the end of this sad situation.”

—CNBC’s Thomas Franck contributed to this report.

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