Monday's early trade: Wall Street slides as investors brace for dour earnings

Wall Street's main indexes slipped on Monday as corporate America launches into what is expected to be a painful quarterly earnings season due to the coronavirus pandemic.

JPMorgan Chase & Co and Wells Fargo & Co will kick off the reporting season on Tuesday, with analysts expecting an uptick in trading revenue to be countered by declines in other businesses and a bleak outlook for the rest of 2020.

The S&P banking subsector shed 3.6%, while the broader financial sector dragged on the benchmark S&P 500.

Overall, earnings for S&P 500 firms are expected to tumble 10.2% in the first quarter, compared with a Jan. 1 forecast of a 6.3% rise, before plummeting 22.4% in the second quarter as sweeping lockdowns halt business activity and spark furloughs.

"This week will be somewhat of an inkblot test," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp in New York.

"There are multiple ways to read the state of play as earnings roll out, is the downturn fully priced in or is there cause for more downward pressure?"

The S&P 500 has recovered about 24% since hitting a three-year low in March, powered by aggressive US monetary and fiscal stimulus and early signs of a potential peaking in US coronavirus cases, but remains about 19% below its mid-February record high.

A staggering 16 million Americans have filed for jobless claims in the three weeks to April 4 and economists expect US unemployment spiking to Depression-era levels in coming weeks as entire sectors shut down to try and contain the pandemic.

The outbreak could reach its US peak this week, a top health official said on Monday, as the White House considers when and how to lift stay-at-home restrictions.

"More than likely, this will be a slow, rolling re-opening of the economy and with the threat of new flare-ups of the virus, policymakers will likely be more cautious than courageous in reversing current guidelines," said Peter Cecchini, global chief market strategist at Cantor Fitzgerald in New York.

At 11:30 a.m. ET, the Dow Jones Industrial Average was down 476.34 points, or 2.01%, at 23,243.03, the S&P 500 was down 49.76 points, or 1.78%, at 2,740.06 and the Nasdaq Composite was down 64.08 points, or 0.79%, at 8,089.49.

Carnival Corp, Royal Caribbean Cruises and Norwegian Cruise Line Holdings tumbled between 8.8% and 14% as the US Centers for Disease Control and Prevention extended its "no sail order" for all cruise ships.

Ford Motor Co shed 5.8% after the carmaker projected quarterly adjusted loss before interest and taxes to be about $600 million, compared with a profit of $2.4 billion a year earlier.

Caterpillar Inc tumbled 8.2% after Bank of America Global Research downgraded the heavy equipment maker to "underperform". Declining issues outnumbered advancers more than 3-to-1 on the NYSE and 2-to-1 on the Nasdaq. The S&P index recorded two new 52-week highs and no new low, while the Nasdaq recorded nine new highs and five new lows.