Stocks sink as US oil prices fall below $0 a barrel: April 20, 2020

Oil is so cheap that producers are paying to stockpilers to take barrels off their hands.

US crude crashed on Monday, falling below $0 to $-1.43 -- the weakest level since NYMEX opened oil futures trading in 1983.

That marks a stunning one-day decline from Friday's close of $18.27 a barrel.

The historic collapse shows that the market is betting the OPEC+ production cuts announced earlier this month aren't enough to offset the unprecedented in demand caused by the pandemic.

Part of Monday's nosedive is being driven by the fact that the May futures contract expires Tuesday, amplifying fears over a lack of storage space.

The June contract isn't selling off by nearly as much, losing only 12.2% to $21.97 a barrel.

The three main US stock benchmarks are all in the red in the early afternoon. The Nasdaq Composite briefly turned positive earlier in the session but since pared its gains again.

Stocks are dragged lower by a collapse in oil prices. US oil fell to a low of just over $4 a barrel for May delivery. The selloff is being driven by the contract rolling off tomorrow and concerns over storage limits of physical oil.

The Dow was last down 1.2%, or some 300 points, while the S&P 500 was 0.8% lower. The Nasdaq was down 0.1%.

JBS USA, a major meat processor, is indefinitely closing its pork production facility in Worthington, Minnesota, the company said Monday.

"We don’t make this decision lightly,” Bob Krebs, President of JBS USA Pork, said in a statement. “We recognize JBS Worthington is critical to local hog producers, the US food supply and the many businesses that support the facility each and every day.”

The Worthington facility processes more than 20,000 hogs each day, and employs more than 2,000 people. Over the next few days, a smaller staff will keep the plant running to move inventory through the system.

JBS USA has closed two plants prior to this one. One, in Souderton, Pennsylvania, reopened on Monday. Another, in Greeley, Colorado, is still closed.

The retail industry is in the midst of unprecedented turmoil. But the Covid-19 pandemic is also leading to opportunities for a select group of strong retailers to grow even more dominant -- thanks in large part to success in the realm of digital shopping.

Walmart (WMT), which owns Jet.com and several other niche e-commerce sites in addition to its own thriving Walmart.com platform, hit a new all-time high on Monday. The stock is now up 11% this year. Shares of Walmart rival Amazon (AMZN) were up more than 2% as well. The stock hit an all-time high last week and has surged more than 30% so far in 2020.

Canadian online retailer Shopify (SHOP) also continues to surge. The stock rose 6% Monday to a new record. Chief technology officer Jean-Michel Lemieux said in a tweet last Thursday that "our platform is now handling Black Friday level traffic every day!" Shares have soared nearly 60% this year.

Chinese e-commerce stocks are on fire as well. Pinduoduo (PDD), which lets people buy goods in groups in order to get big discounts, soared 11% Monday to a new record after it announced it was making an investment in Chinese household appliance and electronics retailer GOME.

Online retail leaders Alibaba (BABA) and JD.com (JD) have also bounced back sharply in recent weeks due to hopes that the worst could soon be over for China's economy.

The Nasdaq Composite turned green mid-morning, having opened more than 1% lower just an hour and a half ago.

The tech-heavy index was up 0.1%. The S&P 500 was down 0.6% and the Dow sunk by 1%, or 245 points.

Health care and consumer stocks are helping push the Nasdaq higher.

Oil prices are plummeting, and they're taking commodity currencies down with them.

US oil prices fell Monday to a low of $10.77 a barrel -- a level not seen since December 1998 -- as the May crude contract is set to expire, and suppliers are running out of places to store barrels.

Currencies of oil-exporting countries like Canada, Norway and Russia are all getting hit.

The US dollar climbed 0.4% against its Canadian rival, to C$1.41, and it gained 0.5% against the Norwegian krone to 10.36 krone per dollar.

Versus the Russian ruble, the dollar climbed 0.8% to 74.44 ruble.

The Brazilian real and Mexican peso, both also considered commodity-driven currencies, are feeling the pain as well. The greenback strengthened more than 1% against each of them.

The oil market is in meltdown mode.

US crude crashed an insane 41% on Monday to as low as $10.77 a barrel – the weakest level since December 1998.

The latest collapse leaves oil down 83% since the January peak of $63.27 a barrel.  

Monday's nosedive was driven by two major forces: the expiration of the oil futures contract and the rapidly vanishing space to store unneeded barrels of oil. Although the May contract crashed below $11 on low volume, the June contract traded above $22. 

That unbelievably large spread is because of the storage problem. Companies will need to pile up barrels in more expensive places like ships. The wider the spread, the more economical these storage alternatives would be.  

The remaining 21 million barrels of storage at the Cushing, Oklahoma, hub will likely be filled up in May -- causing “panic” in the oil markets, Bjornar Tonhaugen, head of oil markets at Rystad Energy, wrote in an email.  

Oil prices spiked above $28 a barrel on April 3 after President Donald Trump talked up massive production cuts by Saudi Arabia and Russia. Crude is now sitting 62% below those April 3 levels.  

US stocks dropped sharply at Monday’s open, as oil prices once again headed lower. US oil prices crashed below $11, dropping to its weakest level since December 1998 at its low point. Oil is selling off as the May crude contract is set to expire, and suppliers are running out of places to store barrels.

Meanwhile, earnings season is roaring on, with companies pulling their forecasts amid the coronavirus uncertainty.

The Dow dropped 1.9%, or 460 points, at the opening bell.

The S&P 500 fell 1.5%.

The Nasdaq Composite opened down 1.1%.

The coronavirus crisis is going to leave a mark on the US economy in the years to come, economists predict. But just how bad will 2020 be for growth?

The expectation is a deep recession in the first half of 2020, followed by a recovery later in the year "that still leaves US GDP down 6%, Europe's down 8%, Japan's down 3% and China's up just 2%," Joseph Amato, president and CIO of Equities at investment firm Neuberger Berman, said in a note on Monday.

The Neuberger model's base case, or most likely scenario, assumes that Covid-19 cases peak around May or June in the United States, with a gradual reopening of the economy in June or July.

Neuberger Berman also identified a best-case scenario, in which the recovery from the virus would leave the US economy to only shrink by 3%. The worst case, on the other hand, assumes a second wave of infections and longer lockdown, with US GDP ending 2020 down 10% or more.

"Given the overall uncertainty and wide range of outcomes, we think volatility could be elevated for a while," Amato said.