The S&P 500 slid Monday, paring some of its gains after its best weekly performance since 1974, as investors looked ahead to the start of corporate earnings season.
The broad stock market index shed 1.2%. The Dow Jones Industrial Average fell about 340 points, or 1.4%. The Nasdaq Composite slipped 0.3%. Stock benchmarks in Tokyo, Shanghai and Seoul closed lower, while markets in Europe, Australia and Hong Kong remained shut for the Easter holiday.
Last week, the S&P 500 climbed 12% to record its best weekly performance in more than 40 years. While the index is down about 14% for the year, it has rallied about 25% from its March 23 low.
It’s “fear of earnings,” said Nancy Davis, founder of Quadratic Capital Management, of Monday’s move. “We had a spectacular risk-on rally last week.”
This week investors will get insights into how the American financial sector is withstanding the turmoil in markets and the economy when major U.S. banks led by JPMorgan Chase, Bank of America and Goldman Sachs Group report quarterly earnings. Some blue-chip American companies including Johnson & Johnson are also scheduled to release results, offering a first look at the impact of social-distancing measures on corporate profits.
Almost 300 companies have withdrawn their financial guidance and about 175 companies have suspended stock buybacks or cut their dividend, according to a Wall Street Journal analysis of the biggest 1,500 public companies in the U.S. A record 17 million people have claimed unemployment benefits as the lockdown spurred a wave of layoffs and furloughs.
“We think markets are probably not prepared for the weakness in the data and, probably, the duration of the weakness in the data,” said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute.
Investors have also been concerned that a too-speedy end to lockdown measures in the U.S. and elsewhere may lead to a second wave of infections as calls for easing restrictions gain momentum. Some officials in President Trump’s administration have suggested reopening the U.S. economy by May 1 by allowing some business activity to resume.
The U.S. leads the world in number of confirmed cases, with more than 550,000 infections known, and fatalities of more than 21,700. Globally, the number of confirmed coronavirus cases topped 1.8 million on Sunday.
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An office of the New York State Department of Labor closed due to coronavirus. A record 17 million people have claimed unemployment benefits as the pandemic shut down swaths of the U.S. economy.
Photo: justin lane/EPA-EFE/ShutterstockOil prices wavered. Brent crude, the global gauge for crude prices, ticked up 2.3% after falling earlier in the session. Saudi Arabia, Russia and the U.S. agreed to lead a deal to collectively pull out more than 13% of world production. Combined with existing sanctions on Iran and Venezuela and outages in hot spots such as Libya, the measures could help withhold 20 million barrels a day of supplies from the market, OPEC said in the draft press release.
Specific details have yet to be disclosed, including whether the U.S. would make additional cuts beyond its commitment to compensate for shortfalls in Mexico’s output reduction, and how the U.S. cuts would be implemented. The benchmark for U.S. crude futures wavered between gains and losses before ticking up 1.7% to $23.15 a barrel.
While the accord is aimed at curbing the glut in oil supplies and preventing a further crash in crude prices, traders remain concerned that a protracted recession in many parts of the world will weigh heavily on demand for oil. Amid travel restrictions and a halt in business activity, oil consumption is expected to fall by as much as 30 million barrels a day this month.
The agreement “unfortunately will fall well short of stabilizing oil markets,” Edward Moya, a senior market analyst for foreign-exchange broker Oanda, wrote in a note. “The number of holes in this production cut deal will make it hard for anyone to feel confident that a firm bottom is in place.”
In Asian equity markets, Japan’s Nikkei 225 dropped 2.3%, while South Korea’s Kospi lost 1.9% and the Shanghai Composite Index slid 0.5%.
The yield on the 10-year U.S. Treasury note ticked up to 0.728% in early trading Monday, according to Tradeweb, from 0.722% Friday.
Corrections & Amplifications
Homin Lee is Asia macro strategist at Lombard Odier in Hong Kong. An earlier version of this article incorrectly stated that he is based in Singapore. (April 13)
Write to Chong Koh Ping at chong.kohping@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com
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