Dow Jones Slumps as Markets Prepare for Recession

The Dow Jones is sliding today as the economic impact of the coronavirus is further realized. Bank of America Corp. (NYSE: BAC) has reported a 45% decline in Q1 profit.

On Tuesday, U.S. President Donald Trump announced that the United States will halt all funding to the World Health Organization as the White House completes its review of the outbreak. More on what's moving the Dow today, below.

Before we get into this story and more, here are the numbers from Tuesday for the Dow, S&P 500, and Nasdaq:

Index Previous Close Point Change Percentage Change
Dow Jones 23,949.76 +558.99 +2.39
S&P 500 2,846.06 +84.43 +3.06
Nasdaq 8,515.74 +323.32 +3.95

Now here's a closer look at today's most important market events and stocks. We'll also discuss the stories that slipped under the radar of the mainstream financial press on Wednesday.

The Top Stock Market Stories for Wednesday

  • Wednesday's headlines will focus on earnings reports from several of the top U.S. banks. Before the bell, Bank of America Corp. (NYSE: BAC) reported a 45% decline in first-quarter profits. The firm has also set aside $3.6 billion for loan loss reserves tied to the ongoing pandemic. Meanwhile, Goldman Sachs Group Inc. (NYSE: GS) announced earnings per share of $3.35, a 41% decline from the same period in 2019. The firm reported a 10% decline in revenue at $7.92 billion. Goldman's silver lining in this report is that it lacks a robust retail banking operation. Rivals are already preparing for a wave of consumer defaults on credit cards and other loans.

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  • This morning, Johns Hopkins University reported more than 125,000 deaths around the globe due to the coronavirus outbreak. Globally, there have been nearly 2 million cases, with 30% happening in the United States alone. Meanwhile, China's National Health Commission announced another 46 new cases, with the bulk tied to travelers arriving from overseas. Meanwhile, Major League Baseball is conducting a massive antibody study to determine the presence of coronavirus in players and staffs from 27 teams.
  • Finally, oil prices are off 5% this morning due to growing oversupply concerns. The International Energy Agency said this morning that the coronavirus outbreak will knock off about a decade of demand this year alone. The agency said it expects that oil demand will fall by 9.3 million barrels per day for the duration of the year. In the second quarter, daily demand is forecast to decline by more than 23 million barrels per day. The agency is also expecting that the recent OPEC production cut may not be enough to avoid overwhelming the broader logistics components in storage, pipelines, and ships in the month ahead.

Stocks to Watch Today: TSLA, GS, CCL, AAL, JBLU

  • Shares of Tesla Corp. (NASDAQ: TSLA) popped by 5% this morning after Goldman Sachs Group Inc. (NYSE: GS) initiated the company with a "Buy" rating and said it expects shares to rally above $800. Shares are now up about 60% over the last seven trading sessions. The company has also been receiving a boost on news that a city in Missouri is offering roughly $1 billion in tax incentives to attract the company's CyberTruck factory.
  • Shares of Carnival Corp. (NYSE: CCL) popped another 9% Tuesday after the company's CEO said the demand for cruises in 2021 is surging. Arnold Donald said that the temporary downturn in the cruise industry has been very difficult, particularly as the company seeks additional financing. The company has bounced back in recent days after a Saudi sovereign wealth fund took an 8.2% stake in the company.
  • Airline stocks continued to move higher on news that the industry is close to a deal to receive billions of dollars in company aid from the government. Shares of JetBlue Airways (NASDAQ: JBLU) popped 16%, while American Airlines Group (NASDAQ: AAL) rallied another 10%. The aid from the Treasury Department is part of a $2 trillion aid package for American businesses.

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About the Author

Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.

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