Despite reports of Congress reaching a deal on a new small business relief package, the stock market fell again on Tuesday as oil prices continued their unprecedented selloff, a day after futures contracts for U.S. oil plunged below zero for the first time in history.
The Dow Jones industrial average was down 2.7%, over 600 points, on Tuesday, the S&P 500 3.1% and the Nasdaq Composite 3.5%. The Dow has now shed more than 1,200 points in the last two days.
WTI crude oil futures for May plunged to their lowest level in history yesterday, falling to –$6.75 per barrel—meaning that sellers are essentially paying buyers to take oil off their hands—amid plummeting global demand.
The May contract, which expires today, began Tuesday trading in negative territory again, at just over –$4 per barrel—but rallied up to around $9 per barrel.
With the energy industry facing deepening losses due to the coronavirus, crude oil futures for June have also plummeted, falling over 35% to around $13 per barrel.
Also on Tuesday, reports emerged that Congressional leaders—after days of tense negotiations—have finally reached a bipartisan deal to replenish funds for emergency small business lending programs, national coronavirus testing and hospitals.
The Senate will reportedly pass the bill and send it to the House later today.
That’s how much the latest relief package will amount to, according to CNBC. The deal will allocate some $320 billion more for the Paycheck Protection Program to provide more small business loans. $75 billion will go to hospitals and $25 billion toward coronavirus testing.
The price of crude oil plunged on Tuesday, alongside plummeting U.S. futures contracts: It ended down over 35%, at around $13 per barrel.
“All hell is breaking loose in oil markets,” says Edward Moya, senior market analyst for Oanda. “This will be oil’s last dance for many U.S. producers,” he predicts, as the Trump administration’s efforts to save the industry will likely “fall short.”
“Many people were shocked to see that oil prices turned negative,” says Ryan Detrick, senior market strategist for LPL Financial
Crude continues to slide, reflecting a “toxic combination of collapsing demand, elevated supplies and diminished storage,” according to Vital Knowledge founder Adam Crisafulli. The coronavirus outlook for markets remains “largely unchanged,” with the focus increasingly shifting to when the economy can reopen—though that process will be a “very slow and arduous one.”
The Paycheck Protection Program, one of the cornerstones of the $2 trillion CARES Act, exhausted its $350 billion in funding last Thursday after less than two weeks. Earlier on Tuesday, Senate Minority Leader Chuck Schumer (D-N.Y.) said that the Senate will likely pass an additional relief bill for small businesses later today, reporting that top Democrats and Republicans had finally come to “an agreement on just about every issue.” Investors have been nervously awaiting news on the government’s plan to replenish funds for the emergency loan program to small businesses, with Congress deadlocked since last week.