US stocks dropped again Tuesday as pressure from the coronavirus crisis pushed oil prices down even further.
The Dow Jones industrial average sank as much as 606.64 points, or 2.5 percent, in early trading with crude oil prices at historic lows. The S&P 500 and the Nasdaq also posted early losses as large as 2.6 and 3.4 percent, respectively.
All three Wall Street indexes tumbled more than 1 percent Monday as US crude prices turned negative for the first time ever, meaning traders were paying to get rid of barrels. Investors have grown worried that there won’t be anywhere to store oil that’s being produced as the coronavirus crisis causes demand to plummet — and experts say those concerns likely aren’t going away anytime soon.
“With US storage tanks likely to get topped off within a month, too many negative drivers remain in place for anyone to start to have a constructive view with oil prices in the coming weeks,” OANDA senior market analyst Ed Moya said in a commentary.
Shares in oil companies slipped following the unprecedented price plunge that spells trouble for American drillers — especially shale producers that have become bogged down with debt.
Occidental Petroleum stock dropped 8.6 percent to a low of $11.50 Tuesday, while Chevron shares tumbled as much as 5.1 percent to $79.25 and BP’s fell 4.7 percent to a low of $21.28. Exxon Mobil shares were recently up 1.8 percent at $41.94 after slipping at the open.
“Dividends for oil companies are in big trouble,” said David Trainer, CEO of investment research firm New Constructs. “With such low prices, they have little to no revenues. As oil and gas firms cut capital spending and delay or close down projects, those with already low profitability are at greater risk of cutting dividends to preserve resources.”