Wall Street slides as focus shifts to earnings

NEW YORK (Reuters) – U.S. stocks fell in subdued trading on Monday after a strong rally last week, as U.S. companies prepared to kick off a widely expected painful quarterly earnings season due to the coronavirus pandemic.

The S&P banking subsector .SPXBK shed 4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} with JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) set to report on Tuesday and analysts expecting a bleak outlook for the year.

Earnings for S&P 500 firms are expected to tumble 10.2{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the first quarter, compared with a Jan. 1 forecast of a 6.3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} rise, before plummeting 22.4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the second quarter as sweeping lockdowns halt business activity and spark furloughs. A staggering 16 million Americans have filed for jobless claims in the three weeks to April 4 and economists expect U.S. unemployment spiking to Depression-era levels in coming weeks as entire sectors shut down to try to contain the pandemic. Helping to limit losses, Amazon.com Inc (AMZN.O) gained 5.3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} as the retail giant said it would hire 75,000 more people amid a surge in demand for online orders.

Volume was lighter than usual with European and other markets still closed following Easter Sunday, but investors “also are facing another phase for the market, and that is the earnings season,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

About 16 million Americans have filed for jobless claims in the three weeks to April 4 and economists expect U.S. unemployment spiking to Depression-era levels in coming weeks as entire sectors shut down to try to contain the pandemic.

The Dow Jones Industrial Average .DJI fell 432.27 points, or 1.82{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, to 23,287.1, the S&P 500 .SPX lost 42.25 points, or 1.51{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, to 2,747.57 and the Nasdaq Composite .IXIC dropped 23.59 points, or 0.29{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, to 8,129.99.

The small-cap Russell 2000 index fell 3.5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

The S&P 500 has recovered about 24{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} since hitting a three-year low in March, powered by aggressive U.S. monetary and fiscal stimulus and early signs of a potential peaking in U.S. coronavirus cases, but remains about 19{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} below its mid-February record high.

New York Governor Andrew Cuomo said on Monday he believed “the worst is over” as hospitalizations appeared to be reaching a plateau in the worst-hit U.S. state, adding that he would announce a coordinated plan on reopening businesses.

Carnival Corp (CCL.N), Royal Caribbean Cruises (RCL.N) and Norwegian Cruise Line Holdings (NCLH.N) tumbled as the U.S. Centers for Disease Control and Prevention extended its “no sail order” for all cruise ships.

Ford Motor Co (F.N) shed 5.1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} after the carmaker projected quarterly adjusted loss before interest and taxes to be about $600 million, compared with a profit of $2.4 billion a year earlier.

Caterpillar Inc (CAT.N) tumbled 8.7{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} after Bank of America Global Research downgraded the heavy equipment maker to “underperform”.

Declining issues outnumbered advancing ones on the NYSE by a 3.28-to-1 ratio; on Nasdaq, a 2.05-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and no new lows; the Nasdaq Composite recorded 13 new highs and 13 new lows.