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* Oil stocks drop as WTI falls to lowest since 1998
* United Airlines drops as it sees $2.1 bln loss
* Amazon, Netflix up amid demand for "stay-at-home" stocks
* Defensive stocks lead declines among S&P sub sectors
* Indexes down: Dow 1.29%, S&P 500 0.81%, Nasdaq 0.10%
(Adds comments, updates to early afternoon)
By Shreyashi Sanyal and C Nivedita
April 20 (Reuters) - U.S. stocks headed lower on Monday
following a strong two-week rally as oil prices crashed, while
investors turned cautious over what is expected to be a
disappointing week for earnings and economic data.
Energy stocks .SPNY shed 1.9% and were on track for their
sixth slide in seven sessions as the front-month May U.S. West
Texas Intermediate (WTI) contract CLc1 plunged more than 50%
to its lowest price on record on storage concerns. O/R
Although energy stocks have far smaller weightage on U.S.
equity indexes when compared with technology or financial
shares, the sheer drop in oil prices underscores the decline in
global growth as demand dries up, analysts said.
"This could be a concern for investors who were expecting a
V-shaped recovery on the economic front," said Dan Russo, chief
market strategist at Chaikin Analytics.
"Oil prices tend to be a gauge for the health of the global
economy. It's difficult to be bullish on global economic growth
with oil prices at multi-decade lows."
Losses on the Nasdaq .IXIC were limited, supported by
gains in Amazon.com Inc AMZN.O and Netflix Inc NFLX.O -
deemed "stay-at-home" stocks as widespread lockdowns fueled
demand for online streaming and home delivery of groceries.
S&P 500 firms have recovered about 30% - or $5.8 trillion in
market value - since a March trough on a raft of global stimulus
and hopes the virus was nearing a peak in the United States.
But the benchmark index remains about 15% below its all-time
high and analysts have warned of a deep economic slump from the
halt in business activity and millions of layoffs.
U.S. jobless claims touched 22 million in the four weeks to
April 11, and analysts have forecast as many as 5 million more
in the latest week. A reading of an April U.S. manufacturing
survey, also due Thursday, is expected to slide to recession-era
levels.
Shares of United Airlines UAL.O fell 4.1% after it warned
of a $2.1 billion pretax loss in the first quarter. Delta Air
Lines Inc DAL.N is scheduled to report later this week, while
Southwest Airlines Co LUV.N has delayed its results to April
28 from April 23.
Overall, analysts expect earnings for S&P 500 firms to fall
13.5% in the first quarter, according to IBES data from
Refinitiv, while Goldman Sachs has predicted share buybacks will
halve and dividends will slide 23% in 2020.
At 13:21 p.m. ET the Dow Jones Industrial Average .DJI was
down 313.63 points, or 1.29%, at 23,928.86, the S&P 500 .SPX
was down 23.21 points, or 0.81%, at 2,851.35 and the Nasdaq
Composite .IXIC was down 8.55 points, or 0.10%, at 8,641.59.
Most declines by midday were led by defensive stocks such as
utilities .SPLRCU and real estate .SPLRCR , which fell more
than 2% each.
"So people are looking to rotate out of names that they
don't think will recover when the market does turn. A lot of
money was hiding in utilities and defensive and now they're
starting to peek their head out," said Rich Steinberg, chief
market strategist at Colony Group.
International Business Machines Corp IBM.N is expected to
report first-quarter earnings after markets close on Monday.
Declining issues outnumbered advancers for a 2.08-to-1 ratio
on the NYSE and for a 1.02-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and no new
low, while the Nasdaq recorded 36 new highs and 10 new lows.