Futures pinned as oil price slump hammers energy stocks


The floor of the New York Stock Exchange (NYSE) stands empty as the building prepares to close indefinitely due to the coronavirus disease (COVID-19) outbreak in New York
FILE PHOTO: The floor of the New York Stock Exchange (NYSE) stands empty as the building prepares to close indefinitely due to the coronavirus disease (COVID-19) outbreak in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson

April 20, 2020

By Shreyashi Sanyal and C Nivedita

(Reuters) – U.S. stock index futures fell on Monday as a slump in oil prices pounded energy stocks, with investors also bracing for another batch of dour first-quarter earnings reports and economic data.

Exxon Mobil Corp <XOM.N> shed 2.4% in premarket trading and Chevron Corp <CVX.N> 3.6% as U.S. crude prices fell to levels last seen in 1999 on concerns of oversupply.

Wall Street’s main indexes have rallied this month, with the S&P 500 <.SPX> ending Friday with its biggest two-week percentage gain since 1974 on a raft of global stimulus and hopes the virus was nearing a peak in the United States.

The Nasdaq <.IXIC> also registered its best two weeks since 2001, powered by new record highs for Netflix Inc <NFLX.O> and Amazon.com Inc <AMZN.O> – deemed “stay-at-home” stocks as widespread lockdowns fueled demand for online streaming and home delivery of groceries.

Still, the benchmark S&P 500 is about 15% below its all-time high and analysts have warned of a deep economic slump from the halt in business activity and millions of layoffs.

“There’s an early street consensus this morning that risk has run too far, too quick,” said Stephen Innes, chief global markets strategist at AxiCorp.

“With several ‘stay-at-home’ names trading at or near year-to-date highs, the risk for a round of profit-taking might be on the cards ahead of S&P 500 earnings reports this week.”

Oilfield services provider Halliburton Co <HAL.N> slid 7.1% after joining bigger rival Schlumberger <SLB.N> in taking impairment hits in the first quarter and issuing a bleak outlook for its North American business.

Oil-related firms Apache Corp <APA.N>, Marathon Petroleum <MPC.N>, Hess Corp <HES.N> and Schlumberger fell between 5.2% and 14%.

After U.S. banks kicked off the quarterly earnings season with painful forecasts for 2020, investors will keep a close watch on reports from Delta Air Lines Inc <DAL.N>, Southwest Airlines Co <LUV.N> and Netflix Inc <NFLX.O> later in the week.

At 7:44 a.m. ET, Dow e-minis <1YMcv1> were down 462 points, or 1.91%, S&P 500 e-minis <EScv1> were down 52 points, or 1.81% and Nasdaq 100 e-minis <NQcv1> were down 87.5 points, or 0.99%.

Hopes have also risen for a gradual reopening of the economy after President Donald Trump cited signs of plateauing in the virus outbreak last week and outlined new guidelines for states to pull out of shutdowns.

But his plan was thin on details and left the decision largely up to state governors.

“The recovery will be much slower than the market is currently pricing in simply because social distancing measures can be relaxed but not removed until we have a vaccine or a very effective cure,” said Andrea Cicione, head of strategy at TS Lombard in London.

In economic news, surveys on April U.S. manufacturing and services sectors are due on Thursday, while U.S. jobless claims are forecast to have hit as many as 5 million in the week ended April 18, on top of 22 million claims in the previous four weeks.

(Reporting by Shreyashi Sanyal and C Nivedita in Bengaluru; Editing by Sagarika Jaisinghani and Anil D’Silva)





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