US stocks slipped Monday as plummeting oil prices dampened some of Wall Street’s optimism about the coronavirus crisis.
The Dow Jones industrial average tumbled as much as 507.44 points, or about 2.1 percent, at the open after posting gains for two consecutive weeks.
The blue-chip index pared the losses by midday along with the S&P 500, which dropped as much as about 1.6 percent in early trading but was recently off 0.4 percent. The tech-heavy Nasdaq dropped about 1 percent before climbing into the green.
The choppy trading came as the May futures contract for West Texas Intermediate crude oil — which expires Tuesday — plunged more than $10-a-barrel into negative territory for the first time in history.
Investors have been concerned about oil producers churning out more fuel than the world can store as the coronavirus pandemic destroyed demand for travel. But the June WTI futures contract held up better — it was down just 9.5 percent at $22.64 a barrel as of 11:27 a.m.
“The oil market’s trading as if we’re in a new Great Depression and demand is not gonna come back for not months, but years,” Chris Rupkey, chief financial economist at MUFG Union Bank, told The Post. “There’s been a sea change in the economic outlook.”
Investors are also grappling with uncertainty about what reopening the US economy will look like at the start of a likely rocky corporate earnings season, according to Eric Marshall, director of research at Hodges Capital Management.
“I think the market will be in kind of a holding period until we get through the first-quarter earnings and we see how companies are positioning themselves to deal with the unknown,” Marshall told The Post.
The drop in oil came amid fears that an international deal to cut global oil production by 9.7 million barrels a day would not be enough to stabilize a market rattled by the virus crisis.
The International Energy Agency has predicted demand for oil will plummet by 26 million barrels a day in May, while supply will fall by just 12 million barrels that month following the deal among Russia, Saudi Arabia and other countries.
Monday’s drop in stocks followed a rally fueled by signs that the worst of the coronavirus crisis has passed. All three Wall Street indexes rose more than 2 percent last week, thanks in part to reports that a drug made by Gilead Sciences was helping coronavirus patients recover quickly.
More positive signals emerged over the weekend as New York Gov. Andrew Cuomo said the state was “past the high point” of the outbreak. Some stores were also slated to start reopening Monday in Germany as the country began to loosen restrictions.
“We’ve seen a strong rebound in equity markets prior to last week so it wasn’t really surprising to see some profit taking,” Craig Erlam, senior currency analyst at OANDA, said in a commentary. “It’s now a question of how keen investors will be to jump back in.”
With Post wires