The major U.S. index futures are pointing to a sharply lower open on Wednesday, with stocks likely to give back ground following the rally seen in the previous session.
Traders have recently expressed considerable optimism about the flattening of the coronavirus curve, but the latest earnings and economic news is likely to remind investors of the devastating economic impact of the pandemic.
Financial giants Bank of America (BAC), Goldman Sachs (GS) and Citigroup (C) are all seeing notable pre-market weakness after reporting sharply lower first quarter earnings.
The steep drop in earnings comes as the major banks set aside billions of dollars to prepare for a flood of defaults on loans due to the coronavirus-induced economic shutdown.
Adding to the negative sentiment, the Commerce Department released a report showing a sharp decline in U.S. retail sales in the month of March.
A separate report from the New York Federal Reserve showed New York manufacturing activity contracted at the fastest rate on record in the month of April.
Another batch of economic data due to be released shortly is likely to provide further indications of the economic impact of the coronavirus pandemic.
Following the mixed performance seen on Monday, stocks moved sharply higher over the course of the trading day on Tuesday. With the strong upward move on the day, the major averages reached their best closing levels in over a month.
The major averages all closed firmly positive, although the tech-heavy Nasdaq outperformed its counterparts. The Nasdaq spiked 323.32 points or 4 percent to 8,515.74, while the Dow jumped 558.99 points or 2.4 percent to 23,949.76 and the S&P 500 surged up 84.43 points or 3.1 percent to 2,846.06.
The rally on Wall Street came as traders continued to express optimism about signs of a flattening of the coronavirus curve.
In a press briefing on Monday, President Donald Trump defended his administration's response to the pandemic and indicated he is working on plans to re-open the country.
Other officials, such as White House health advisor Dr. Anthony Fauci and New York Governor Andrew Cuomo, have also recently expressed cautious optimism.
Cuomo said on Tuesday that the number of coronavirus deaths in New York rose to 778 on Monday after declining for two days but noted other indicators continue to be more encouraging.
Encouraging exports data out of China has also helped ease fears of the pandemic resulting in a deep global recession.
In dollar terms, Chinese exports decreased 6.6 percent on a yearly basis in March, data from the General Administration of Customs revealed. This was much slower than the expected decrease of 14 percent.
Meanwhile, the International Monetary Fund warned the global economy could see the worst recession since the Great Depression as a result of the coronavirus pandemic and the containment measures adopted to slow the outbreak.
World GDP is set to contract 3 percent this year, thanks to the lockdowns imposed by countries around the world, the IMF said in its latest World Economic Outlook report. The lender expects global GDP to grow 5.8 percent next year.
In a January update to the WEO, the IMF had predicted 3.3 percent global growth this year and a 3.4 percent expansion for next year. In 2019, the world economy grew 2.9 percent.
Traders were also digesting the latest corporate results as earnings season gets underway, with healthcare giant Johnson & Johnson (JNJ) moving sharply higher after reporting first quarter results that exceeded analyst estimates and raising its quarterly dividend.
On the other hand, JPMorgan (JPM) and Wells Fargo (WFC) came under pressure after both financial giants reported weaker than expected first quarter earnings.
Technology stocks turned in some of the market's best performances on the day, contributing to the particularly strong upward move by the tech-heavy Nasdaq.
Apple (AAPL) helped lead the way higher, with the tech-giant spiking by 5 percent as Chinese government data showed iPhone sales in China rebounded dramatically in March to about 2.5 million.
Reflecting the strength in the tech sector, the Dow Jones U.S. Software Index skyrocketed by 4.7 percent, the Philadelphia Semiconductor Index soared by 4.4 percent and the NYSE Arca Networking Index surged up by 3.4 percent.
Substantial strength was also visible among retail stocks, as reflected by the 4.4 percent jump by the Dow Jones U.S. Retail Index. The rally came a day ahead of the release of a report on U.S. retail sales in March.
Healthcare, utilities, and commercial real estate stocks also saw considerable strength on the day, while banking stocks bucked the uptrend following the disappointing earnings news from JPMorgan and Wells Fargo.
Commodity, Currency Markets
Crude oil futures are falling $0.39 to $19.72 a barrel after plunging $2.30 to $20.11 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,745.10, down $23.80 compared to the previous session's close of 1,768.90. On Tuesday, gold climbed $7.50.
On the currency front, the U.S. dollar is trading at 107.56 yen compared to the 107.22 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0862 compared to yesterday's $1.0980.
Asia
Asian stocks fell broadly on Wednesday after the International Monetary Fund said the global economy will likely contract by about 3 percent in 2020 amid the spread of the coronavirus, officially known as COVID-19.
As countries implement necessary quarantines and social distancing practices to contain the pandemic, the contraction of the economy is expected to be more severe than the recession of 2008 and 2009, the IMF said.
Chinese shares fell despite the country's central bank cutting the interest rate on its medium-term funding for financial institutions to a record low in an attempt to combat the economic fallout from the coronavirus health crisis.
The benchmark Shanghai Composite Index ended down 16.11 points, or 0.6 percent, at 2,811.17, while Hong Kong's Hang Seng Index fell 1.2 percent to 24,145.34.
Japanese shares fell as the yen strengthened against the dollar and reports suggested Prime Minister Sinzo Abe is considering a request made by a coalition partner to pay a cash handout of 100,000 yen per person.
The Nikkei 225 Index dropped 88.72 points, or 0.5 percent, to 19,550.09 after rising over 3 percent the previous day. The broader Topix finished marginally higher at 1,434.07.
Mining and marine transportation companies paced the decliners, while air transportation and land transportation firms ended on a positive note. Market heavyweight SoftBank lost 2 percent and oil company Inpex gave up 4 percent.
Australian markets ended lower after a measure of consumer confidence in the country declined the most on record in April, taking the indicator beyond the global financial crisis lows.
The benchmark S&P/ASX 200 Index dropped 21.40 points, or 0.4 percent, to 5,466.70 after the IMF warned Australia could be one of the worst-hit economies in the Asia-Pacific, shrinking by 6.7 percent this year. The broader All Ordinaries Index ended down 19.20 points, or 0.4 percent, at 5,523.30.
Oil and gas stocks were the biggest drag after crude futures in New York plummeted more than 10 percent on Tuesday amid rising oversupply in the global market and worries about plunging demand. Worley, Beach Energy and Santos tumbled 4-6 percent.
Infant formula specialist Bubs Australia soared 5.2 percent. The company reported its highest quarterly gross revenue as sales in China more than doubled in the quarter ended March 31 from the year-ago period.
The South Korean market was closed as the country heads to the polls for parliamentary elections.
Europe
European stocks have fallen sharply on Wednesday as investors brace for the first quarter earnings season that should provide more of a sense of how the coronavirus pandemic will affect businesses and the global economy.
Some 80,000 people have now died from the disease in Europe — about two-thirds of the global toll — according to the European Centre for Disease Prevention and Control.
Underlying sentiment turned cautious as France became the fourth country to report more than 15,000 deaths due to the coronavirus after Italy, Spain and the United States.
There have now been more than 12,000 deaths from the coronavirus in the U.K. The death toll is expected to jump by 50 percent when authorities include deaths occurring outside of hospitals.
Elsewhere, the German economy entered a recession in March and the slowdown is expected to continue until the middle of the year, the economy ministry said.
While the German DAX Index has plummeted by 2.9 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both down by 2.7 percent.
Dutch semiconductor equipment maker ASML Holding NV has come under pressure. The crucial supplier to Samsung Electronics reported a 40 percent drop in first quarter earnings and refrained from providing guidance for the next three months. Dialog Semiconductor shares have also slumped.
Dutch navigation and digital mapping company TomTom has also plunged after it swung to a net loss for the first quarter of 2020.
Oil & gas company Total SA has also fallen as crude oil futures dropped to test the $20 a barrel level again amid rising oversupply in the global market and worries about plunging demand. Royal Dutch Shell and BP Plc are also posting steep losses.
Hunting Plc, an energy services group, has also fallen sharply. The company said the impact of the oil price decline has affected demand within the segments focused on U.S. onshore completions since March end.
U.S. Economic Reports
Reflecting the impact of the coronavirus-induced shutdown, the Commerce Department released a report on Wednesday showing a sharp decline in U.S. retail sales in the month of March.
The Commerce Department said retail sales plummeted by 8.7 percent in March after falling by a revised 0.4 percent in February.
Economists had expected retail sales to plunge by 8.0 percent compared to the 0.5 percent drop originally reported for the previous month.
Excluding a nosedive in sales by motor vehicle and parts dealers, retail sales still tumbled by 4.5 percent in March following a 0.4 percent decrease in February. Ex-auto sales were expected to slump by 4.8 percent.
The New York Fed said its general business conditions index plummeted to a negative 78.2 in April from a negative 21.5 in March, with a negative reading indicating a contraction in regional manufacturing activity. The index was expected to slump to a negative 35.0.
With the much bigger than expected nosedive, the general business conditions index plunged to its lowest level in the history of the survey—by a wide margin.
The Federal Reserve is scheduled to release its report on industrial production in the month of March at 9:15 am ET. Industrial production is expected to plunge by 4.0 percent in March after rising by 0.6 percent in February.
At 10 am ET, the National Association of Home Builders is due to release its report on homebuilder confidence in the month of April. The housing market index is expected to nosedive to 55 in April after dipping to 72 in March.
The Commerce Department is also scheduled to release its report on business inventories in the month of February at 10 am ET. Economists expect business inventories to decrease by 0.4 percent.
At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended April 10th.
Crude oil inventories are expected to jump by 11.6 million barrels after spiking by 15.2 million barrels in the previous week.
At 2 pm ET, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.
Stocks In Focus
Shares of J.C. Penney (JCP) are moving sharply lower in pre-market trading after a report from Reuters said the department store chain is exploring filing for bankruptcy protection after the coronavirus pandemic forced the retailer to temporarily shut its 850 stores.
J.B. Hunt Transport Services (JBHT) may also be in focus after the trucking company reported slightly weaker than expected first quarter earnings but its revenues exceeded analyst estimates.
Meanwhile, airline stocks such as Southwest Airlines (LUV) and Delta Air Lines (DAL) are likely to see initial strength after the industry reached an agreement in principle with the federal government on financial assistance.
Shares of Teladoc Health (TDOC) may also move to the upside after the telemedicine company raised its first quarter revenue guidance, saying it has seen an unprecedented surge in demand for its services due to the COVID-19 outbreak.
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December 26, 2025 08:42 ET Third quarter economic growth data from some major economies including the U.S. were the main news in this holiday shortened week. GDP growth and industrial production data from the U.S. helped to boost morale, while the consumer confidence survey results were less upbeat. In Europe, the quarterly economic growth data from the U.K. drew attention, while the minutes of the Australian central bank’s latest policy session was in focus in Asia.