Stocks fell Monday after oil prices collapsed to below zero for the first time as demand for crude has dried up and Wall Street prepped for a busy week of corporate earnings.
The Dow Jones Industrial Average finished down 592 points, or 2.44%, to 23,650, the S&P 500 declined 1.79% and the Nasdaq slipped 1.03%.
Monday's finish was a far cry from Friday's close, when the S&P 500 rallied and finished higher for the second straight week, the first back-to-back weekly gains since the market selloff began in mid-February.
U.S. crude futures for May delivery, the near-term contract, sank to their lowest level on record Monday, falling to negative $52.24 a barrel as traders fretted over the capacity of storage facilities both in the U.S. and abroad. Contracts for June delivery ended down 18.3%, at $20.03 a barrel.
"In my view, the plunge in oil prices speaks to the decline of global growth as demand dries up," said Dan Russo, chief market strategist at Chaikin Analytics, a quantitative investment research firm based in Philadelphia.
"This could be a concern for investors who were expecting a V-shaped recovery on the economic front. Oil prices tend to be a gauge for the health of the global economy. It's difficult to be bullish on global economic growth with oil prices at multidecade lows."
OPEC+ and other producers cut production by 9.7 million barrels a day earlier in April, but the cuts weren't seen as enough to counter the demand drop caused by the coronavirus pandemic.
Around 90 S&P 500 companies are expected to report quarterly earnings this week, with Refinitiv estimating first-quarter profits for the index fell 13% from the year-earlier period and will fall another 27.3% over the three months ending in June.
The Trump administration and Congress expect an agreement to be reached on an aid package of up to $450 billion to boost a small-business loan program that has run out of money.
The package will add funds for hospitals and Covid-19 testing. Senate Majority Leader Mitch McConnell said Monday the Senate would convene again Tuesday.
Shake Shack (SHAK) - Get Report said it would return a small business loan it received from the small-business loan program to help it through the coronavirus pandemic after it received extra funding late last week.
Shake Shack said last week it would furlough or lay off 1,000 employees and Chief Executive Randy Garutti and Founder Danny Meyer said in a statement seen Monday the company needed the assistance.
The company was able to get extra funding late last week through an “equity transaction” and decided to “immediately return” the $10 million paycheck protection loan it obtained through the CARES Act, Garutti and Meyer said.