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US stocks climb into positive numbers

By SCOTT REEVES in New York | chinadaily.com.cn | Updated: 2020-03-30 23:08


US stocks opened tepidly Monday but climbed and remained in positive territory in early trading despite growing concerns that the economy may be shut down for an extended period as officials grapple with measures to contain the spread of the coronavirus.

In early trading, the Dow Jones Industrial Average rose 222.43 points, or 1.06 percent, to 21,866.90. The S&P 500 rose 1.44 percent. The Nasdaq Composite was up 1.43 percent.

Bond yields fell as investors sought safety in government treasuries.

Dow futures bounced between gains and losses before the market opened, suggesting another volatile day, or at best gains or losses within a narrow margin.

Analysts expect a sharp economic contraction in the second quarter. Unemployment is expected to spike and consumers are expected to reduce spending. Consumer spending represents about 70 percent of the US economy. A sharp reduction in spending and demand could lead to a downward spiral.

Oil, a proxy for future economic activity, dropped Monday to its lowest level since 2002.

Saudi Arabia and Russia are flooding the world with cheap oil in an attempt to gain market share. This further depresses the price.

Analysts at Bank of America believe global oil demand will fall by 12 million barrels a day in the second quarter ¬– the sharpest decline on record.

The drop in demand could create a problem few considered when the economy was strong: A lack of storage space. Production in market economies is likely to fall, leading to layoffs in the supply chain.

Gasoline prices are low at the pump, but demand is down as many people work from home and eliminate recreational travel.

West Texas Intermediate crude, the guide to US prices, fell $1.41, or 6.56 percent to $20.13 a barrel. Brent crude, the worldwide benchmark, fell $6.20, or 7.19 percent to $25.89 a barrel. Overall, the price of Brent oil has fallen about 60 percent this year.

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