Wall Street Close: COVID-19 impact on US economy has investors profit taking

In profit-taking mode, the US benchmarks were back in their familiar form, dropping on starkly bad data pertaining to the lockdowns and falling in line with warnings earlier this week from the International Monetary Fund over the global economy. The COVID-19 implications for the economic backdrop are keeping investors out of long positions for longer and threaten to carve out fresh bearish impulses in the indices that have managed at least a 50% mean reversion of the 2020 rout. 

Performances in the benchmarks had the Dow Jones Industrial Average losing 445 points, or 1.9% to close at about 23,507 and the S&P 500 index retreating 62 points, or 2.1% to end the session at roughly 2,783. The Nasdaq Composite index also dropped, losing 123 points, or 1.4% to close near 8,393 as US data reminded investors how much worse things will get before they can start to improve. 

US data in the pits

Analysts at ANZ Bank gave a summary of the disappointments across the board:

• The Empire manufacturing index for April fell to -78.2 well below the expectations of -35 and the previous read of -21.5. New orders, shipments, and average workweek all fell sharply. On the forward-looking indicators, there were falls in Capex and number of employees suggesting that businesses are not expecting a V-shaped recovery.
• Car production drops: Industrial production recorded its largest fall since 1946 – down 5.4% m/m in March. Motor vehicle production slumped 28% due to both supply chain disruptions and reduced demand.
• Record fall in retail sales: US retail sales for March fell by a record 8.7% m/m with spending on clothing and furniture impacted the most.
• Housing plunges: The NAHB Housing Market Index dropped by a record 42 pts in April, but it is still above GFC levels. All three components of the index being present sales, expected sales, and buyer traffic all fell sharply. 

Meanwhile, in company news, shares of banks=ing giants,  Citigroup C and Bank of America BAC, both dropped, by 5.6% and 6.5% respectively. Banks are in focus as bad loans trouble the minds of the market, reminiscent of 2008 and a sovereign debt crisis. 

DJIA levels