The Tax Day That Wasn’t

By Alex Eule |  Wednesday, April 15

A Painful Reminder. Investors have known the numbers would be bad, but the latest batch of economic data that arrived this morning may have been too much to absorb all at once. The new figures confirmed that Covid-19 related pain will last far beyond a peak in infection rates. 

U.S. retail sales fell 8.7% in March, the largest decline on record. And the numbers are likely to look worse this month, since the virus-related shutdown didn't kick in until the middle of March. An important housing-market gauge, meanwhile, posted its largest one-month drop ever, turning housing sentiment negative for the first time since 2014. And a New York manufacturing survey fell to its lowest level on record. "Firms anticipate only a small improvement in business conditions over the next six months," the report said. 

Barron's Lisa Beilfuss and Shaina Mishkin had a full day keeping up with the news. You can read their stories and more of Barron's economic reporting here. 

The price of crude oil fell below $20 for the first time since 2002, after the International Energy Agency said that global oil demand could plunge by 29 million barrels a day in April, compared with a year earlier. 

After staying generally positive in recent days, investors had a change of heart. The Dow Jones Industrial Average fell 445 points, or 1.9%, while the S&P 500 was off 2.2%. It was the worst day for both indexes since April 1. 

There was painful news on the corporate front as well. The virus may be the final straw for long-struggling J.C. Penney. The department store said it wouldn't make a $12 million interest payment due today. The company has 30 days before going into default. It plans to use the grace-period "to evaluate certain strategic alternatives." The stock, which has spent most of the year below $1, tumbled 27%, to 23 cents. Barron's Alexandra Scaggs has more on J.C. Penney's potential next steps. 

Bank of America and Goldman Sachs Group became the latest major banks to report results. Earnings at the financial firms have all taken a hit as they set aside huge amounts of cash to cover an anticipated wave of bad loans. Bank of America said it was putting aside $3.6 billion for credit losses, while Goldman's reserve rose to $937 million, up from $224 million.

Yesterday, JPMorgan Chase said it had increased its credit reserve to $6.8 billion, while Wells Fargo raised its bad-loan provision to $3.1 billion. 

So far, Goldman is the only one of the four banks whose stock rose after reporting results. The firm's first-quarter revenue managed to come in ahead of estimates, helped by its lucrative trading unit, which saw business soar thanks to the recent volatility. Goldman's stock finished the day up 0.2%.