Cheaper than bottled water; Oil price plummets to historic lows
New York: Stocks are slipping in afternoon trading on Wall Street, as the price of oil cratered to historic lows Monday, cheaper than bottled water.
The S&P 500 was down 0.8%, as of 1:30 p.m. Eastern time, after wavering between sharper and milder losses. But the market's most dramatic action was in oil, where benchmark U.S. crude for May delivery plummeted to a record low below 1.50 per barrel, a 90% drop in just one day.
Much of the plunge was chalked up to technical reasons the May delivery contract is close to expiring so it was seeing less trading volume, which can exacerbate swings.
But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged. Demand for oil has collapsed so much due to the coronavirus pandemic that facilities for storing crude are nearly full.
Benchmark U.S. crude oil for June delivery fell 12.9% to 21.69 per barrel, as factories and automobiles around the world remain idled. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it's not enough.
Basically, bears are out for blood, analyst Naeem Aslam of Avatrade said in a report. The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut. Halliburton swung between gains and sharp losses, even though it reported stronger results for the first three months of 2020 than analysts expected.
The oilfield engineering company said that the pandemic has created so much turmoil in the industry that it cannot reasonably estimate how long the hit will last. It expects a further decline in revenue and profitability for the rest of 2020, particularly in North America.
Brent crude, the international standard, was down 1.78 to 26.30 per barrel. Big oil-producing countries have agreed to cut production to help balance supplies with demand, but many analysts say the cuts are not sharp enough to lift prices.
In the stock market, the mild drops ate into some of the big gains made since late March, driven lately by investors looking ahead to parts of the economy possibly reopening as infections level off in hard-hit areas.
Pessimists have called the rally overdone, pointing to the severe economic pain sweeping the world and continued uncertainty about how long it will last.
The Dow Jones Industrial Average was down 283 points, or 1.2%, to 243,958. The Nasdaq was close to flat.
More gains from companies that are winners in the new stay-at-home economy helped buoy the market. Amazon rose 1.4%, and Netflix jumped 3.8% as people shut in at home buy staples and look to fill their time. Clorox likewise rose toward a new record and was up 1% as households and businesses that remain open look to stay clean.
In Tokyo the Nikkei 225 fell 1.1% after Japan reported that its exports fell nearly 12% in March from a year earlier as the pandemic hammered demand in its two biggest markets, the U.S. and China.
The Hang Seng index in Hong Kong lost 0.2%, and South Korea's Kospi fell 0.8%.
European markets were modestly higher The German DAX was up 0.5%, the French CAC 40 was up 0.7% and the FTSE 100 in London gained 0.7%.
In a sign of continued caution in the market, Treasury yields remained extremely low. The yield on the 10-year Treasury slipped to 0.64% from 0.65% late Friday. It started the year near 1.90%. Bond yields drop when their prices rise, and investors tend to buy Treasurys when they're worried about the economy.
Stocks have been on a generally upward swing recently, and the S&P 500 just closed out its first back-to-back weekly gain since the market began selling off in February. Promises of massive aid for the economy and markets by the Federal Reserve and U.S. government ignited the rally, which sent the S&P 500 up as much as 28.5% since a low on March 23.
More recently, countries around the world have tentatively eased up on business-shutdown restrictions put in place to slow the spread of the virus.
But health experts warn the pandemic is far from over and new flareups could ignite if governments rush to allow normal life to return prematurely.
The S&P 500 remains about 15% below its record high in February as millions more U.S. workers file for unemployment every week amid the shutdowns.
Many analysts also warn that a significant part of the recent recovery in stocks is due to the expectation among some investors that the economy will rebound sharply once economic quarantines are lifted.
They're essentially predicting that a line chart of the economy will ultimately resemble the letter V, with a wild ride down but then a quick pivot to a vigorous recovery.
That may be to optimistic. We caution that a U-shaped recovery is also quite likely, where the economy bottoms out and stays at that low level for a while before recovering, strategists at Barclays warned in a recent report.
Without strong testing programs for COVID-19, businesses likely won't feel comfortable bringing back their full workforces for a while.
With risk assets now overbought, the chance for a correction has increased, Morgan Stanley strategists wrote in a report.
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I don''t know what happened, says baffled Axar
New Delhi (PTI): Axar Patel didn't have much to answer when Delhi Capitals failed to defend 264 against Punjab Kings on Saturday and looked even more perplexed after his team crumbled to 75 versus Royal Challengers Bengaluru in their second straight IPL surrender within a space of 48 hours.
Delhi Capitals were reduced to 9 for 6 inside Powerplay overs with Bhuveneshwar Kumar getting appreciable swing and Josh Hazlewood executing short ball tactic to perfection.
The result was season's lowest score and RCB cantered to a nine-wicket win.
"Even I don't know what happened. That's why they say you have to be on your toes in cricket. We have to move on from this match," Axar said at post match presentation ceremony.
The single that David Miller refused in a one-run defeat against Gujarat Titans did affect the tournament momentum for DC and Karun Nair dropping dollies against Punjab Kings only made matters worse.
"From today's point of view, you can say it did effect, but you can look back, if the catches were taken (Nair) or had we taken the single against GT, then momentum would have been with us. The game is such that there is no room for ifs and buts. You have to be positive, you had a bad day and take the positives from the last 5-6 games," Axar added.
However the DC skipper refused the notion that there was exaggerated swing on offer which one felt after Bhuveneshwar Kumar's banana inswing cleaned up a clueless former India U-19 Sahil Parakh.
"I wasn't surprised, they are world class bowlers, they swing it every ground, but if our openers or top order had played them out then the result might have been different."
Hazlewood, who dismissed KL Rahul and Nitish Rana with short balls said that he wasn't sure what kind of track would be on offer after close to 530 runs were scored in the previous game.
"Probably turning up here after 500-plus runs in the last game, was not sure what was going to happen," Hazlewood said, adding that he followed pace bowling colleague Bhuvneshwar Kumar's advice.
"Was just following his (Bhuvneshwar) lead. There was a bit there in the first six overs - enough there to work with, and it was skidding on quickly from a short of a length. Once the ball got soft, it got more even," Hazlewood said.
He also spoke about how he set up Rana, who looked in a tangle and out of depth while facing a short ball.
"In general, you wanted the batter to hit it down the wicket and in the V. The short ball was nice as well, just about the accuracy. When that ball was nice and hard, it was tough to bat. Would have been nice to bowl four and get off the field," said Hazlewood.
His skipper Rajat Patidar was also surprised at how things panned out.
"Even I am surprised the way wicket played," RCB skipper said.
"All credit goes to the bowlers, Bhuvi and Hazlewood. They hit the right areas. The swing was normal but the good thing was we got early wickets and that kept us in the driving seat. The way Suyash bowled, stump to stump, it was really good to see," he concluded.
