Dow drops 140 points as doubts grow over Trump’s promise of an oil price deal between Saudi Arabia and Russia
- Wall Street stocks opened down on Friday after rising 2% the day prior
- Doubts returned over whether a Saudi-Russia deal on oil prices would occur
- Their price war has sent oil prices plummeting amid plunge in demand
- US is a major oil producer and investors want to see oil prices rise
Wall Street stocks opened down on Friday, as doubts grew about an end to the Saudi-Russia oil price war and investors awaited data on business activity to assess the extent of the economic hit from coronavirus.
Stock indexes gained about 2 percent on Thursday as oil prices soared on hints of a Saudi-Russia deal, but doubts returned on whether the rebound would last as demand tapers off due to the health crisis.
Walt Disney said on Thursday it would furlough some U.S. employees this month, while sources said luxury retailer Neiman Marcus was stepping up preparations to seek bankruptcy protection.
At 9.31am, Dow Jones futures were down 140.02 points, or 0.65 percent, at 21,273.42.
The empty New York Stock Exchange is seen in a file photo as traders work remotely during the pandemic. Stock futures slid on Friday as hopes of an oil price deal dwindled
Data at 10am is expected to show a reading of ISM’s non-manufacturing activity index dropped to 44 in March from 57.3 in February.
A reading below 50 indicates contraction in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The Labor Department said at 8.30am that employers cut 701,000 jobs last month after adding a revised 275,000 in February. The unemployment rate shot up to 4.4 percent from 3.5 percent.
However, report is far from an accurate depiction of the economic carnage being inflicted by the contagious coronavirus as it only covers data through March 12.
A separate jobless report on Thursday showing 6.6 million Americans applied for unemployment this week was a ‘hard dose of economic reality,’ said Jeffrey Halley of Oanda in a report.
That was double the previous week’s record-breaking U.S. job losses of 3.3 million.
It raised the total number of Americans who are out of work due to the coronavirus-driven downturn to almost 10 million.
On Thursday, stocks rose after oil surged more than 30 percent immediately after President Donald Trump said he expects Saudi Arabia and Russia to back away from their price war.
‘Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!’ Trump tweeted on Thursday.
Saudi Arabia said it would call an emergency meeting of the Organization of the Petroleum Exporting Countries, state media reported.
The amount cited by Trump would represent an unprecedented cut equal to 10 percent to 15 percent of global supply, in output per day terms, a common unit of measurement.
However, Trump provided few details, an omission some analysts said was likely intentional, and which they said explained a pullback in prices in global stock markets.
In early March, talks over production cuts between the two countries collapsed, leading them to start a price war that pushed oil prices to the lowest levels in nearly two decades.