U.S. stocks finished near session lows Monday as investors watched oil futures crash, overshadowing optimism about plans for a staggered easing of global lockdowns in the wake of the COVID-19 pandemic.
Senators also were in a deadlock over potential additional emergency funds for small businesses.
How did benchmarks perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.43% tumbled 592.05 points, or 2.4%, to settle at 23,650.44. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.37% lost 51.40 points, or 1.8%, to close at 2,823.16. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.05% shed 89.41 points, or 1.2%, to end at 8,560.73, after briefly flipping into positive territory.
The benchmarks are coming off a strong week, where the Dow gained 2.2%, the S&P 500 advanced 3% and the Nasdaq put in a weekly return of 6.1% on Friday.
What drove the market?
Plunging oil prices overshadowed optimism over signs of peak infections in parts of the world, including New York, and plans from Europe, notably Germany , to begin unwinding the recent global economic pause due to the pandemic.
West Texas Intermediate crude for May delivery finished down $55.90 on Monday, more than 306%, to settle deeply in negative territory at -$37.63 a barrel on the New York Mercantile Exchange, meaning that you have to pay to get someone to take barrels of oil off your hands amid a growing supply glut and storage shortage. The May contract expires at Tuesday’s close. Any traders that are still long crude at that time must take physical delivery, while anyone short must make delivery.
The hope has been that lockdowns of global cities will be gradually removed, spurring optimism that growth could start to make a recovery and bolster markets, even as the potential for a second wave of infections, as a result of easing restrictions, has kept investors on edge.
“It’s a tug of war,” Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions in Boston, told MarketWatch. “Historically, when we’ve had crises over the last 20 to 30 years, we’ve always been programmed to lean more optimistic, and also to buy the dip,” he said.
But when it comes to oil prices, Janasiewicz said the market was oversupplied to begin with. “Now we’re seeing slower grow and less oil demand, which still needed to be accounted for.”
New York Gov. Andrew Cuomo on Monday reiterated his call for the federal government to help source vital reagents and other materials needed to start conducting antibody tests to help determine how many New Yorkers were infected with COVID-19, as part of the Empire State’s efforts to reopen its economy. Such testing served as a major cornerstone of Germany’s gradual restarting of its economy on Monday .
Global infections of COVID-19 have exceeded 2.4 million , with more than 165,000 lives lost to the contagion that was first identified in China in December.
Democratic lawmakers and Treasury Secretary Steven Mnuchin on Sunday said they were close to striking a deal to replenish a roughly $350 billion small-business recovery program, according to reports . But Senate Majority Leader Mitch McConnell threw cold water on hopes of a quick resolution to the funding stalemate, saying that lawmakers would reconvene again Tuesday to discuss the program.