The coronavirus outbreak and its effect on businesses and the economy will remain a focal point among market participants this week.
As of Sunday morning, confirmed coronavirus cases neared 1.8 million globally with over 110,000 total deaths, according to Johns Hopkins University data. Over the weekend, total deaths in the U.S. topped those in Italy. There were more than 530,000 confirmed cases in the U.S. and 20,608 deaths.
“In a country the size of the U.S., cities and regions will be at different stages of their outbreaks at different times. It is possible that some lesser affected regions begin to relax restrictions over the coming weeks, although the majority of the U.S. population will probably remain in lockdown until the end of this month,” Capital Economics wrote in a note April 9. “Furthermore, it is possible that some restrictions might need to be re-imposed if a second wave of local outbreaks occurs, as we’ve seen in Asia.”
Investors will get a glimpse into the health of the consumer when the U.S. Commerce Department releases March retail sales data on Wednesday.
Consensus expectations are for a steep drop during the month due to the rapid spread of the coronavirus in the the U.S. Headline retail sales are expected to have plunged 8% during the month, down from a 0.5% decline in February, according to economists surveyed by Bloomberg. Core retail sales, excluding volatile autos and gas, are estimated to have fallen 5%, down from a 0.2% dip in February.
“Activity during the month likely fluctuated notably and the impact is unlikely to be uniform across all industries,” Nomura said in a note to clients April 9. “While the March report will reflect average activity, sales were likely notably weaker at the end of the month, when almost all states enforced some type of stay-at-home order, relative to the first week of March. This suggests April’s numbers will likely be even worse.”
Credit Suisse economist James Sweeney agreed that the worst is yet to come. “March should mark only the beginning of a recessionary decline in consumption and the decline is likely to intensify in April. Overall we expect consumption to fall by 17.5% QoQ annualized in Q2, the worst quarter since WWII,” Sweeney wrote in a note April 9.
Big bank earnings
Earnings season kicks off with big banks gearing up to report earnings this week. JPMorgan Chase and Wells Fargo will report Tuesday, Bank of America, Citigroup and Goldman Sachs are schedule to report Wednesday and BlackRock will round things out on Thursday.
“Given the speed and severity of the economic impact, earnings season (which begins next Tuesday with some of the big banks reporting) is set to be very challenging as earnings growth is likely to be negative and near-term visibility for most companies will be clouded or even suspended.* The biggest question for investors will be whether this is a temporary COVID-19-induced interruption that should see a sharp rebound after the virus dissipates or if there is permanent damage to the longer-term earnings power of companies.” Raymond James Chief Investment Officer Larry Adam said in a note April 9.
Tuesday: Import Price Index month-on-month, March (-3.2% expected, -0.5% in February)
Wednesday: MBA Mortgage Applications, week ended April 10 (-17.9% prior); Retail Sales Advance month-on-month, March (-8.0% expected, -0.5% in February); Retail Sales excluding Autos month-on-month, March (-5.0% expected, -0.4% in February); Retail Sales excluding Autos & Gas month-on-month, March (-5.0% expected, -0.2% in February); Empire Manufacturing, April (-35.0 expected, -21.5 in March); Industrial Production month-on-month, March (-4.2% expected, +0.6% in February); Capacity Utilization, March (73.7% expected, 77.0% in February); NAHB Housing Market Index, April (56 expected, 72 in March); Net Long-term TIC Flows, February ($20.9 billion); Total Net TIC Flows, February ($122.9 billion prior)
Thursday: Housing Starts, March (1.307 million expected,1.559 million in February); Building Permits, March (1.3 million expected, 1.452 million in February); Philadelphia Fed Business Outlook, April (-30.0 expected, -12.7 in March); Initial Jobless Claims, week ended April 11 (5 million expected, 6.606 million prior); Continuing Claims, week ended April 4 (7.46 million prior); Bloomberg Consumer Comfort, week ended April12 (49.9 prior)
Friday: Leading Index, March (-7.0% expected, +0.1% in February)
Wednesday: PNC Financial (PNC), Bank of America (BAC), Citigroup (C), Charles Schwab (SCHW), UnitedHealth Group (UNH), US Bancorp (USB), Goldman Sachs (GS) before market open; Bed Bath & Beyond (BBBY) after market close
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
More from Heidi: