U.S. stocks opened lower Tuesday, amid worsening data on coronavirus deaths in the U.S. and Spain, after global equities initially found support following data showing a rebound in Chinese manufacturing activity in March, as the country comes out of a lockdown.
What are the major indexes doing?
The Dow Jones Industrial Average
fell 109 points, or 0.5%, at 22,221 while the S&P 500 index
declined 15 points, or 0.6% to 2,610. The Nasdaq Composite
retreated 31 points, or 0.4% to trade at 7,745.
Stocks were in rebound mode Monday, with the Dow rising 690.70 points, or 3.2%, to finish at 22,327.48. The S&P 500 index climbed 85.18 points, or 3.4%, to 2,626.65. The Nasdaq Composite Index rose 271.77 points, or 3.6%, to 7,774.15.
For the month of March, the Dow is on pace to lose 12.1%, the S&P 500 11.1% and the Nasdaq is set to retreat 9.3%. The Dow is on pace to have its worst first quarter in history, according to Dow Jones Market Data, down 21.8%, while the S&P 500 is on track to lose 18.7% and the Nasdaq 13.4%, as of Monday’s close.
What’s driving the market?
Concerns remain over the spread of COVID-19 in the U.S., Europe in particular, with economic activity under lockdown amid a rising tally of infections and a mounting death toll. Spain reported its highest numbers of deathssince the crisis began Tuesday, while coronavirus-related fatalities in the U.S. surged past 3,100, according to Johns Hopkins University.
Global equities enjoyed a lift after data on China’s manufacturing and service sectors showed unexpectedly strong rebounds in March as the country emerged from the lockdown aimed at arresting the spread of COVID-19.
The official manufacturing purchasing managers index for manufacturing rose to 52.0 in March from a record low of 35.7 in February, the National Bureau of Statistics said Tuesday, topping expectations for a reading of 51.5. The 50 mark separates expansion of activity from contraction.
China’s official service sector purchasing managers index climbed to 52.3 in March from a record-low reading of 29.6 in February.
The PMI readings were “well above expectations and almost too good to be a true for an economy that is still not fully functioning at its pre-crisis optimum level,” said Michael Hewson, chief market analyst at CMC Markets, in a note.
Analysts said the stock market’s strong rebound last week and further rally on Monday were encouraging, but the continued volatility made for a treacherous near-term trading backdrop. The debate over whether stocks put in a bear-market bottom on March 23 continues, with analysts noting that past downturns have also seen strong bounces from selloffs, followed by retests of the lows.
“Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been. In 2000/01, there were four rallies of greater than 20% before ultimately reaching a bottom, and in the financial crisis, the S&P 500 had a false breakout of 27% before hitting a bottom,” noted Mark Hackett, chief of investment research at Nationwide, in a note.
In economic data, the Case-Shiller home price index for January showed U.S. home prices rising 3.9% annually, before the U.S. economy began feeling the economic impact of the coronavirus. At 9:45 a.m. Eastern Time, data on the Chicago-area manufacturing sector will be released, while data on consumer confidence is due at 10 a.m.
Which companies are in focus?
• Cruise-line operator Carnival Corp.
said it would suspend its dividend and the repurchase of its common stock, in an effort to improve liquidity as the spread of COVID-19 has led to the pause of its fleet cruise operations. Shares fell 6% after a 28% drop over the past two sessions and nearly 75% over the past three months.
• Several energy stocks were posting significant gains, after suffering significant declines as oil prices touched their lowest levels since 2002, before rebounding early Tuesday. Exxon Mobil Corp.
gained 1.8% , while Occidental Petroleum Corp.
advanced 6% and Haliburton Co.
• McCormick & Co. Inc. reported fiscal first-quarter earnings that beat expectations, but sales that fell short Tuesday morning. Shares of the spice and condiments manufacturer fell 1.3%.
• Shares of Domino’s Pizza Inc. fell Tuesday after the pizza-delivery company said Monday evening that global sales were on pace to rise 4.4% in the first quarter as stay-at-home orders boost demand for food delivery. The company’s stock has risen 2.4% in March, versus a 11.1% decline for the S&P 500.
How are other markets trading?
Oil prices rebounded from 19-year lows, with the price of a barrel of West Texas Intermediate crude oil
for May delivery up 4.4$, or 88 cents to about $21. In precious metals, gold
fell $15, or 0.9% to $1,607 an ounce.
The U.S. dollar
gained 0.5% against a basket of its major trading partners, according to the ICE U.S. Dollar index.
European stocks were trading higher, with the Stoxx Europe 600