Wall Street opens lower, still plagued by the oil plunge

  •   24/04/2020 - 11h05
  •   DEHOUI Lionel

On Monday at around 2 p.m., the New York Stock Exchange dropped 1.92% to 23 195.51 points for the Dow Jones. The Nasdaq lost 1.5% to 8386.26 points. The S&P also fell 2.00% to 2766.75 points. The New York Stock Exchange (Wall Street) ended Monday in the red. This came after the price of a barrel of oil collapsed in the market. Indeed, the contract expiring in May 2020 had ended with a negative price. Wall Street's flagship index, the Dow Jones and the Nasdaq lost 2.44% and 1.79% respectively. This phenomenon, which is unprecedented on Wall Street in terms of the price of a barrel of oil, is causing concern among market players, especially investors. It should be noted that the price of American oil on the New York market at the May deadline fell to finish at less than $38.

72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. This is an advert for trading CFDs on Plus500
Wall Street opens lower, still plagued by the oil plunge

The fall in oil prices

Investors had to negotiate their contracts to get rid of them because of the lack of storage infrastructure. In the Wall Street market on Tuesday, crude oil prices were falling. The June futures contracts on West Texas Intermediate (WTI) and North Sea Brent have lost about 30% and 23% respectively

In recent weeks, the oil market has seen a collapse in prices. This situation is caused by the impact of the coronavirus health crisis. The impact is reflected in restrictive measures such as containment and travel bans, which is a real brake on economic activities. However, it has led to a drastic drop in the global demand for oil.


The support of the U.S. government

Donald Trump, the American president is flying to the rescue of American oil and gas producers. The president said Tuesday that there will be a financial contingency plan to support U.S. producers. He said he gave instructions for financial resources to be allocated to oil and gas companies. This was done with the aim of safeguarding jobs for the long term.

Another such important topic was at the heart of Tuesday's debates between Democratic parliamentarians and the US government. It was the negotiations for a second line of federal loans. This loan will support US small and medium sized enterprises in the face of the Covid-19 crisis. It should be pointed out that no vote has been scheduled yet despite the encouraging speeches by Democratic and Republican leaders last week.


Further information

On the other hand, Coca Cola, the American beverage group, signaled Tuesday before the opening of Wall Street that the measures adopted to contain the Covid-19 crisis could reduce its sales in the second quarter of this year. Coca Cola stock lost 0.6% in the market. On the other hand, the American company Lockheed, specialized in the production of weapons, speaks of an increase in its sales over the first three months.

However, its production units and raw material purchasing line could be slowed down due to the health crisis.