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US stocks lower on continued concern about pandemic

By SCOTT REEVES in New York | chinadaily.com.cn | Updated: 2020-05-11 23:43

US stocks fell in early trading Monday amid continued concern about reopening the economy during coronavirus pandemic.

In what may be a cautionary sign, South Korea on Sunday reported the largest one-day increase in new infection in a month and the government advised citizens to prepare for a second wave of infections.

Governors of several states, including Florida and Texas, plan partial restarts of the economy while others, including California, Michigan and New York, remain largely locked down.

British Prime Minister Boris Johnson also plans to ease stay-at-home orders.

The coronavirus pandemic will cut China's purchases of US goods in 2020 far short of the "phase one" trade agreement, the Center for Strategic and International Studies said in a report.

The Washington-based think tank, offering the worst-case scenario, said US exports to China could be as low as $60 billion this year, about 68 percent below $186.6 billion called for in the agreement.

"The targets were never realistic," senior advisor Scott Kennedy said in a report. "They were just gaudy numbers meant to impress. The pandemic made the unrealistic the impossible."

The US Federal Reserve is unlikely to adopt negative interest rates to boost the economy during the downturn caused by the coronavirus pandemic, The Wall Street Journal reported. Negative rates would hurt the banking industry and would be used only as a last resort, the Journal said.

The Fed prefers to stimulate growth with programs used during the 2008 downturn, including the purchase of long-term securities and keeping interest rates low.

In early trading, the Dow Jones Industrial Average fell 188.64 points, or 0.77 percent, to 24,145.92. The S&P 500 slipped 0.57 percent. The Nasdaq Composite dipped 0.16 percent.

Saudi Arabia said it will cut oil production by an additional 1 million barrels per day. The reduction, to take effect June 1, brings the country's total reduction to about 4.8 million barrels per day below April production.

"The Kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets," a statement in the Saudi Press Agency said.

A glut of oil during the coronavirus slowdown has depressed oil prices, briefly sending US prices into negative territory as supply exceeded demand and storage capacity.

West Texas Intermediate crude, the gauge for US oil prices, rose 1.01 percent in early trading Monday to $24.99 a barrel. Brent crude, the worldwide benchmark, slid 0.23 percent to $30.89 a barrel.

Hotel operator Marriott International reported first-quarter net income of $31 million compared with $375 million for the same period a year ago, a decline of about 92 percent.

"The resilience of travel demand is evident in the improving trends we see in Greater China," CEO Arne Sorenson said in a statement. "Occupancy at our hotels in the region reached 25 percent in April, up from less than 10 percent in mid-February."

"Looking at our occupancy and booking trends, it appears that lodging demand in most of the rest of the world has stabilized, albeit at very low levels. Occupancy was around 20 percent over the past two weeks in North American limited-service hotels, benefiting from leisure and drive-to demand."

In early trading, Marriott's shares rose 1.38 percent.

Sports apparel maker Under Armour reported a first quarter net loss of $589.7 million compared with a profit of $22.5 million a year ago after stores closed to curb spread of the coronavirus, also called COVID-19.

The company said apparel sales fell 23 percent, footwear revenue dropped 28 percent and accessories dropped 17 percent compared with the same period a year ago.

In response, Under Armor said it will cut costs by about $325 million in 2020, including the temporary lay off of some retail workers.

"Since mid-March, as the pandemic accelerated dramatically in North America and retail store closure ensured, we've experienced a significant decline in revenue across all markets," CEO Patrik Frisk said in a statement.

In early trading, Under Armour's shares fell 8.77 percent.

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