The S&P 500 Index ($SPX) on Tuesday closed down -3.07%, the Dow Jones Industrials Index ($DOWI) closed down -2.67%, and the Nasdaq 100 Index ($IUXX) closed down -3.71%.
U.S. stock indexes on Tuesday sold off sharply with the S&P 500 and Nasdaq 100 at 1-week lows and the Dow Jones Industrials at a 1-1/2 week low. A plunge in crude oil prices by more than -40% on Tuesday undercut energy and bank stocks. Also, concern about Q1 corporate earnings weighed on the equity markets.
Oil prices plunged for a second day Tuesday as Jun WTI crude closed down by more than -40%. Crude prices have collapsed as storage tanks, pipelines, and tankers around the world are quickly being filled to capacity by the vast oil glut caused by one-third slump in oil demand. Bank stocks also retreated on Tuesday due to their exposure to oil and gas loans if record-low crude prices spark loan and bond defaults in the industry.
The pandemic continues to keep large swaths of the economy closed, which is a major negative factor for many stock sectors. Confirmed cases of the virus have risen above 2.54 million globally, with deaths exceeding 176,000.
Concern about Q1 corporate earnings results is another major bearish factor for equity prices. IBM fell by more than -2% Tuesday after it withdrew its full-year earnings forecast and reported Q1 revenue of $17.57 billion, below the consensus of $17.69 billion.
Comments on Tuesday from White House economic adviser Hassett weighed on stocks when he said the decline in U.S. Q2 GDP could end up being "the biggest we've ever posted because so many things have just shut down."
Geopolitical concerns were another negative for stocks on conflicting reports about the health of North Korea's leader Kim Jong Un, who was said to be in critical condition after undergoing cardiovascular surgery last week. If Kim Jong Un were to be dead or incapacitated for a long period of time, it would be unclear who would be in control of North Korea's nuclear weapons.
A bullish factor for stocks was the bipartisan agreement in Washington for a fourth coronavirus rescue package. The new rescue package will replenish the Paycheck Protection Program (PPP) for small businesses and will also boost funding for hospitals and expanded coronavirus testing
Tuesday's U.S. economic data was bearish for stocks after Mar existing home sales fell sharply by -8.5% to an 11-month low of 5.27 million, although that was slightly stronger than expectations of -9.0% to 5.25 million.
Tuesday's global economic data was mixed for growth prospects and neutral for stocks. The German Apr ZEW survey expectations of economic growth index rose +77.7 to a 3-3/4 year high of 28.2, stronger than expectations of +7.5 to -42.0. Conversely, the UK Feb ILO unemployment rate unexpectedly rose +0.1 to a 14-month high of 4.0%, showing a weaker labor market than expectations of unchanged at 3.9%.
The VIX S&P 500 Volatility Index ($VIX) on Tuesday jumped to a 2-week high of 47.77 and finished the day up +1.58 at 45.41. The VIX is consolidating moderately above last Tuesday's 3-week low of 37.31 and well below the 11-1/4 year high of 85.47 posted on March 18.