The positive momentum in equities declined last week amid soft economic data and the extension of social-distancing guidelines, with major U.S. indexes falling around 2% to 3%. Stocks struggled to gain traction as coronavirus cases continued to surge in the U.S. and most other countries, widening the economic impact.
Oil surged on prospects of a global deal to cut output and support prices, but the positive sentiment was undercut by the release of regional economic activity surveys that signaled a sharp decline in global growth. Employment indicators also showed stress in the labor market, with the U.S. economy losing 700,000 jobs in March and unemployment rising from record lows. With 10 million Americans filing for unemployment benefits in the last two weeks, unemployment is likely to continue to rise over the next few months.
Going into earnings season, 2020 is expected to bring the biggest year-over-year decrease in earnings since 2008. As of March 30, FactSet projected that earnings for companies in the S&P 500 will decrease by 1.2% this year. The research firm expects a 5.2% first-quarter decline followed by a 10.0% drop in the second quarter.