U.S. stocks sank at the open Wednesday, April 15, with the Dow Jones industrial average falling more than 500 points after dismal earnings and retail data.
Retail sales plunged 8.7% in March for its worst monthly decline ever as the coronavirus gutted consumer spending, yanked millions out of the workforce and forced people to stay home.
The figures stand in stark comparison to February's revised 0.4% decline and sent U.S. markets southward. The Dow dropped 550 points, or 2.3%. The Standard & Poor's 500 index and Nasdaq composite also fell sharply.
Markets were also bruised after weak earnings reports from major banks. Bank of America said its first-quarter profit dropped 45%, and Goldman Sachs said it suffered a 46% decline in profit. Citigroup reported a similarly bleak drop.
Wednesday's retail figures offered another lens into just how quickly the outbreak seized the American economy. The drop blew past economist expectations of about 8%.
American consumers drive 70% of the country's economy. But now, spending at restaurants, retail stores, malls and the like has essentially hollowed out.
"The stock market can discount the slowing of the spread of the coronavirus, but it can't ignore the sharpest one-month drop in retail sales on record," said Chris Rupkey, chief financial economist at MUFG Union Bank. "Retail sales say this is a depression not a recession and who knows when corporations will make money again.
Across the country, grocery shelves are picked clean of eggs and flour, toilet paper and disinfectant wipes. Delivery workers risk their lives to bring packages to people's doorsteps. Wednesday's figures from the Commerce Department show that sales at food and beverage stores were up 28% compared to March of last year.
But those dynamics don't capture the full picture of just how abruptly spending has faltered. Sales at clothing stores fell by 50.7% compared to last year. Car sales fell off between February and March and could see even steeper declines by April. On Wednesday, Best Buy said it would furlough 51,000 store employees in the U.S., or about 40% of the company's total workforce.
"Outside of grocery stores, the story was nearly universally negative," said Jim Baird, chief investment officer at Plante Moran Financial Advisors. "Higher-ticket and non-discretionary sectors were hit especially hard. Auto and furniture sales plummeted more than 25%. Far and away, the greatest impact was felt in apparel retailers."
The repercussions from the coronavirus outbreak have been swift and stinging. More than 17 million Americans have filed for unemployment benefits. The federal government has responded with trillions of dollars in emergency relief to households, small businesses and entire industries. About 80 million people will receive stimulus checks by Wednesday. But even a boost of $1,200 - which people are mostly spending on food - is unlikely to save a retail sector in free fall.
The industry was struggling well before the pandemic took hold. More than 60,000 stores have closed in recent weeks, according to Coresight Research, and retailers have canceled millions of dollars' worth of orders. By the start of April, nearly 1 million retail workers were furloughed as giants including Macy's, Gap, Kohl's, L Brands and J.C. Penney sent most of their employees home without pay.
For comparison, at the peak of the Great Recession, retailers eliminated 2.6 million jobs.
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The Washington Post's Abha Bhattarai contributed to this report.
This article was written by Thomas Heath and Rachel Siegel, reporters for The Washington Post.