Stocks sink on Wall Street as grim economic news pours in

NEW YORK — Stocks swung back down Wednesday after more signs piled up of the economic damage being caused by the coronavirus outbreak.

Markets have been stuck cycling between fear and budding optimism in recent weeks as investors try to guess how long and deep the looming recession will be, with the switch often flipping overnight or even within the same day.

Economists have been slashing forecasts in advance of what‘s expected to be the worst downturn since the Great Depression, and several reports Wednesday were even more dismal than expected, including a record drop for U.S. retail sales. Adding to the gloom: More banks made moves in anticipation that households and companies across the economy will get crunched by the recession and default on billions of dollars in credit-card debt and other loans.

Stocks around the world were already down in early Wednesday trading, reversing Tuesday’s up trend, and the drops accelerated after the release of the reports. The S&P 500 was down 2.7%, as of noon Eastern time. The Dow Jones Industrial Average fell 619 points, or 2.6%, to 23,330, and the Nasdaq was down 1.9%.

“We should take any company forecast and analyst forecast with a grain of salt here,” said David Kelly, chief global strategist at JPMorgan Funds “There are many analysts who are just as bewildered as companies are.”

“What you need to be here is an epidemiologist more than anything else,” he said.

Stocks will likely remain volatile as long as investors are uncertain about how long the downturn caused by the outbreak will last, and that ultimately depends on when health experts can corral the virus.

Wednesday’s economic lowlight was a report that showed U.S. retail sales sank a record 8.7% last month, as the engine of the U.S. economy gets locked away amid widespread stay-at-home orders to slow the spread of the virus. Industrial production across the country dropped in March by the largest percentage since 1946, while an April survey of manufacturers in New York state fell to its lowest reading on record. A measure of confidence among home builders hit its lowest level since 2012.

Treasury yields sank after the release of the reports, a sign of concern among investors about future growth in the economy. The yield on the 10-year Treasury fell to 0.63% from 0.75% late Tuesday.

The economic data is so dire that prices for stocks are swinging on the basic question about whether some companies will continue to exist.

“What you want to know is that the company can survive intact,” said Kelly. “You need to know that the company can weather the storm.”

After that, the eventual recovery will also largely depend on when and how U.S. consumers get back to spending.

“How does this impact consumer behavior in an economy largely driven by consumers?” asked Keith Buchanan, portfolio manager at Globalt.

Energy stocks took the sharpest losses after oil prices plunged to another 18-year low. Those in the S&P 500 index fell 7.3%, including a 16.1% plunge for Noble Energy and a 6.9% drop for Exxon Mobil.

Demand for oil around the world will fall this year by a record amount amid widespread lockdowns, the International Energy Agency said Wednesday. Benchmark U.S. crude touched its lowest price since 2002 before recovering slightly to $19.54, down 57 cents, from a day earlier. Brent crude, the international standard, fell $1.98, or 6.7%, to $27.62 per barrel.

Financial stocks were also among the market’s biggest losers after more banks said they had to set aside billions of dollars in preparation for a coming avalanche of defaults. Bank of America fell 6.3% after reporting its results, while Citigroup lost 3.5%.

In Europe, London’s FTSE 100 lost 3.3%, and the DAX in Frankfurt declined 3.9%. The CAC 40 in France retreated 3.8%. The Nikkei 225 in Tokyo declined 0.5%, and Hong Kong’s Hang Seng was off 1.2%.

Investors are focusing on how and when authorities may begin to ease business shutdowns and limits on people’s movements imposed to slow the spread of the coronavirus. The S&P 500 had jumped 3.1% just a day earlier on hopes that the outbreak was leveling off in some hotspots and could lead to parts of the economy opening back up.

It capped a rally that sent the S&P 500 up 27% since hitting a bottom on March 23, which got its start following massive aid promised by the Federal Reserve and U.S. government to prop up the economy.

President Donald Trump has been discussing how to roll back federal social distancing recommendations. U.S. governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the coronavirus from rebounding.

China has reopened factories, shops and other businesses after declaring victory over the outbreak but forecasters say it will take months for industries to return to normal output, while exporters will face depressed global demand.

But if the market’s hopes for an upcoming reopening prove to be too optimistic, it likely sets them up for steep declines ahead.

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AP Business Writer Joe McDonald contributed.