U.S. stocks are shaky in early trading on Monday, as markets around the world made tentative moves amid all the uncertainty about whether global authorities can do enough to nurse the economy through the coronavirus outbreak.
The S&P 500 was up close to 1% in the first half-hour of trading, renewing gains after falling close to the flatline. European markets were mixed after paring earlier losses. Asian markets were down, but by more modest degrees than the huge swings that have rocked investors over the last month.
Some of the sharpest action was in the oil market, where benchmark U.S. crude fell more than 6% and dropped below $20 per barrel at one point for the first time since early 2002. Oil started the year above $60, and prices have plunged on expectations that a weakened global economy will burn less fuel. The world is awash in oil, meanwhile, as producers continue to pull more of it out of the ground.
The tentative market moves follow last week’s stellar performance, where the S&P 500 surged 10.2% for its biggest weekly gain since the market hit bottom in 2009 following the financial crisis.
Most voices on Wall Street are telling investors to prepare for more losses as economists forecast a downturn that could surpass even the Great Recession, but the first green shoots of optimism may be appearing.
Congress last week passed a $2 trillion rescue package for the economy, and the Federal Reserve promised to buy as many Treasurys as it takes to get lending markets working smoothly. Forced selling by investors looking to raise cash may also be easing, and Morgan Stanley strategists said the worst may be behind us. They say another pullback in stocks is likely, but they say the roughly 25% drop for stocks since the S&P 500 set its record last month offers some buying points for investors willing to wait six to 12 months.
Goldman Sachs, though, warned the market will likely turn lower in the coming weeks.
Most investors say they expect markets to remain extremely volatile until the virus slows its spread. Until then, investors won’t know how long the economic downturn will ultimately last.
President Donald Trump extended restrictive social distancing guidelines through April, bowing to public health experts who presented him with even more dire projections for the expanding coronavirus pandemic.
Global infections now total more than 720,000. And more than 34,000 people have died around the world.
Most people who contract COVID-19 have mild or moderate symptoms, which can include fever and cough but also milder cases of pneumonia, sometimes requiring hospitalization. The risk of death is greater for older adults and people with other health problems.