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- US stocks slid for second straight day on Tuesday as oil prices continued to whipsaw in the face of a supply glut and lack of storage options.
- West Texas Intermediate crude contracts expiring in May traded as low as -$16.74 a barrel on Tuesday before settling at $10.01.
- June contracts slipped as much as 68%, to $6.50 amid the turbulence before closing at $13.59.
- Watch major indexes update live here.
US stocks plummeted on Tuesday amid escalating strain on the oil market.
All three major indexes extended their downturns from Monday’s session as West Texas Intermediate crude contracts expiring in June plunged as much as 68%. Â The commodity market faces unprecedented pressure from a severe lack of storage capacity and weak demand amid the coronavirus pandemic.
Here’s where major US indexes stood at the 4 p.m. ET market close on Tuesday:
- S&P 500: 2,736.56, down 3.1%
- Dow Jones industrial average: 23,018.88, down 2.7% (632 points)
- Nasdaq composite: 8,263.23, down 3.5%
West Texas Intermediate oil futures expiring in May traded as low as -$16.74 a barrel on Tuesday before settling at $10.01. That’s up from Monday’s close of -$37.63. Selling pressure seeped into WTI crude contracts for June, which closed 33% lower, at $13.59 a barrel. Brent crude slid 23%, to $19.81.
Popular oil ETF United States Oil Fund tanked as much as 38% amid the commodity rout. The fund’s manager said in a regulatory filing it issued the last of its remaining shares and requested approval from the Securities and Exchange Commission to register an additional 4 billion. The lack of new issuances threatens to decouple the ETF from oil and its price changes.
Investors looking for clear winners and losers amid the market turmoil aren’t going to have it easy, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. The near-term outlook favors firms equipped to address the current demand shortage, he added, but several variables could quickly shift market sentiments.
“Shippers and storage facility companies looked interesting yesterday and potentially still have room to run in the near term, depending on how long the current supply/demand/storage situation lasts,” Zaccarelli said in an emailed statement. “Energy companies appear to be a falling knife at this point.”
Goldman Sachs sees stabilization taking weeks to arrive. “Shutting down a well is extremely expensive,” Jeff Currie, the firm’s global head of commodities research, said in a Monday CNBC interview, adding that producers are unlikely to react quickly and bring rapid aid to the battered market.
“We don’t think this is the end of it,” Currie said. “You’re likely to see this continue to go on at least through the middle of May.”
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The energy sector was particularly slammed by the commodity market tumble. The combined market capitalization of S&P 500 energy firms recently dropped to $700 billion, making that corner of the market roughly half the size of Microsoft’s $1.4 trillion market cap, Bespoke Group reported on Monday.
IBM’s first-quarter report added fuel to the stock-market fire. The company announced a 3% decline in year-over-year revenue and pulled its 2020 earnings forecast amid heightened uncertainty. Shares closed down 3.4%.
The back-to-back market slides are a sharp reversal from recent moves. After two straight weekly gains, Monday’s session saw the Dow drop nearly 600 points amid the historic oil slump. Tuesday’s decline is poised to wipe out nearly all gains made in the previous week.
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