Wall Street rally vanishes; oil prices drop

By Stan Choe and Alex Veiga The Associated Press

5 years ago

Tommy Gannon, assistant supervisor, Facilities, rings the opening bell at the New York Stock Ex ... — Tommy Gannon, assistant supervisor, Facilities, rings the opening bell at the New York Stock Exchange and recognizes the Sodexo food services staff at Beth Israel Deaconess Medical Center in Boston, Tuesday, April 7, 2020, in New York. (New York Stock Exchange via AP)

NEW YORK — A big rally on Wall Street suddenly vanished Tuesday, the latest twist for a market dominated by sharp swings amid the coronavirus outbreak.

The S&P 500 dipped 0.2% after erasing a surge of 3.5% earlier in the day. The market’s gains faded as the price of U.S. crude oil abruptly flipped from a gain to a steep loss of more than 9%.

It dampened what had been an ebullient day for markets worldwide. European and Asian markets rallied earlier, following up on Monday’s 7% surge for the S&P 500 on encouraging signs that the coronavirus pandemic may be close to leveling off in some of the hardest-hit areas of the world.

Even though economists say a punishing recession is inevitable, some investors have begun to look ahead to when economies will reopen from their medically induced coma. A peak in new infections would offer some clarity about how long the recession may last and how deep it will be.

Investors could then, finally, envision the other side of the economic shutdown, after authorities forced businesses to halt in hopes of slowing the spread of the virus. In the meantime, governments around the world are talking about pumping trillions of dollars more of aid for the economy.

Many professional investors say they’ve been wary of the recent upsurge and expect more volatility ahead. The S&P 500 has rallied nearly 19% since hitting a low on March 23, though it’s still down 21.5% from its record set in February.

“It’s important to remember we shouldn’t over-extrapolate temporary trends,” said Patrick Schaffer, global investment specialist at J.P. Morgan Private Bank.

Such concerns were borne out in Tuesday’s trading, when the S&P 500 swung up, down, up, down and back up again through the day.

The S&P 500 fell 4.27 points to 2,659.41. The Dow Jones Industrial Average slipped 26.13 points, or 0.1%, to 22,653.86 after losing an earlier gain of 937 points. The Nasdaq composite dropped 25.98, or 0.3%, to 7,887.26.

Oil prices have been even more volatile than the stock market in recent weeks as demand has dried up for energy amid a global economy weakened by the coronavirus outbreak. Russia and Saudi Arabia have also been locked in a price war, refusing to cut production sharply even as the world is awash in excess oil.

More economic misery is also on the horizon. Economists expect a report on Thursday to show that 5 million Americans applied for unemployment benefits last week as layoffs sweep the country. That would bring the total to nearly 15 million over the past three weeks. Analysts also expect big companies in upcoming weeks to report their worst quarter of profit declines in more than a decade.