By Geoffrey Smith
Investing.com -- U.S. stock markets remained sharply lower for a second-straight day on Tuesday as a string of corporate warnings about the impact of the Covid-19 pandemic reinforced a painful hangover from Monday's volatility in oil markets.
By 11:25 AM ET (1525 GMT), the Dow Jones Industrial Average was down 610 points, or 2.8%. The S&P 500 was down 3.1% and the Nasdaq Composite was down 3.8%, the latter in part due to weak data on exports of South Korean semiconductors.
All three indices had fallen heavily at the start of the week as crude oil prices had turned negative due to crushing oversupply in the spot market.
The psychological shock of seeing oil, the world's most important commodity for the last 100 years, trade below zero for the first time on Monday has been profound. Of the majors, only Exxon Mobil (NYSE:XOM) outperformed the broader market, remaining basically flat. while Chevron (NYSE:CVX) stock was down 1.7%, and ConocoPhillips (NYSE:COP) was down 2.75%. Smaller upstream companies were outperforming slightly after heavy falls in the previous session.
Analysts at Goldman Sachs (NYSE:GS) argued in a note to clients on Tuesday that while the coordinated cut by OPEC and its allies had been "too little, too late" to save prices in the current quarter, but created the basis for a solid rebound in the second half.
President Donald Trump, meanwhile, raised expectations of a possible bailout for the sector on Tuesday, tweeting that: "We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!"
Congressional Democrats had previously blocked the appropriation of some $3 billion for purchases to fill the Strategic Petroleum Reserve, and do not appear to have changed their position since. Trump mentioned on Monday that an import ban on Saudi oil could be considered.
Away from the oil patch, a number of heavyweight stocks underperformed after the Covid-19 pandemic hit their reports for the first three months of this year; Coca-Cola (NYSE:KO) warned that the closure of social venues would hit it particularly badly in the current quarter, while IBM (NYSE:IBM) stock fell 5.9% after it warned of a sharp drop in business investment after the bell on Monday. Big Blue returned to its trend of falling revenue as clients deferred major upgrades to their IT. German rival SAP's ADRs (NYSE:SAP) fell 5.8% after the departure of co-CEO Jennifer Morgan less than six months after she was promoted to the job.
Lululemon Athletica (NASDAQ:LULU) stock had a different sort of Covid-19 problem after a rogue art director promoted a T-shirt with the motif "bat fried rice", triggering outrage in China, where it was perceived as a reference to the livestock market in Wuhan where the virus is believed to have jumped species. Lululemon stock was down 4.1%.
By contrast, the day's biggest gainer was Beyond Meat (NASDAQ:BYND) stock, which rose more than 5% after announcing a distribution deal with Starbucks (NASDAQ:SBUX) in China. Demand for plant-based alternatives to meat is seen by both companies as being structurally supported by the negative publicity around China's policing of its food chain.