[New York Close] Oil Plummets Amid Earnings Concerns and Shockwaves

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The New York stock market closed lower amid the shock of international oil prices recording a negative value for the first time in history.

On the 20th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 592.05 points (2.44%) to close at 23,650.44, the S&P 500 index dropped 51.40 points (1.79%) to 2,823.16, and the Nasdaq fell 89.41 points (1.03%) to close at 8,560.73.

The decline in oil prices, which occurred amid growing concerns that the second wave of stock market drops could come due to negative outlooks on corporate earnings season caused by the novel coronavirus disease (COVID-19), dealt a decisive blow to the stock market decline.

On that day, the May West Texas Intermediate (WTI) crude oil contract closed at minus (-) $37.63 per barrel. The drop was as much as 300%. This was the first time in history that oil prices recorded a negative value. The June WTI contract, which is traded the day after, remained in the $20 range per barrel, but the situation is not reassuring. The June WTI also dropped by 28%, indicating that the outlook for oil prices is not bright going forward.

The sudden plunge in oil prices on that day was a temporary phenomenon occurring as the May futures contract was expiring the next day, but the scale of the drop showed that the current market is not functioning normally.

The fact that corporate earnings announcements will begin in earnest this week is also a source of anxiety. Delta and other airlines, which have been directly hit by COVID-19, are scheduled to announce their earnings.

On that day, UBS downgraded its investment rating on Walt Disney from buy to neutral. The reason was concerns that theme parks might remain closed until January next year and that the suspension of various sports events could hurt revenue from sports broadcasting and the performance of feature films. Concerns over poor earnings are not unique to Walt Disney.

Amid the economic downturn, the U.S. government’s additional support for small businesses is not progressing quickly. On that day, the Senate discussed an additional stimulus package including $370 billion in support for small businesses but failed to reach a conclusion.

This content was produced with the assistance of AI translation services.