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Coronavirus, durable goods: What to know in markets Friday

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April 23, 2020

COVID-19 and its impact on the U.S. economy will remain front and center for market watchers Friday.

Cases have topped 2.6 million worldwide and more than 187,000 people have died from the coronavirus. The U.S., Spain and Italy have the most infections around the world, according to Johns Hopkins University. There were 856,000 cases in the U.S. and 47,000 deaths in the U.S., as of Thursday evening.

Warehouse full of new household equipmentsWarehouse full of new household equipments

Warehouse full of new household equipments

Every aspect of the U.S. economy has been feeling the wrath of COVID-19, and the durable goods report released Friday is also expected to have taken a big hit from the pandemic.

“Durable goods data are a key input into estimates for business equipment investment, and our forecast would suggest a third consecutive quarterly decline in capex spending,” Credit Suisse economist James Sweeney wrote in an April 16 note.

In March’s preliminary reading, durable goods orders are expected to have plunged 11.3% during the month following a 1.2% increase in February. Durable goods orders excluding transportation will likely have dropped 5.1% compared to a -0.6% decline in February.

“In the last recession, the worst quarters for consumer spending and business investment occurred one quarter apart, but with the current shutdown affecting both households and businesses, business investment should start falling immediately. Although consumer spending may recover if shutdown measures get loosened later in Q2, business investment can stay weak for an extended period. Business sentiment has plunged to new or near-record lows, corporate profits are dropping sharply, and the decline in oil prices is bringing the energy sector to a halt. We expect equipment spending to continue falling into Q3, with a tentative recovery more likely to begin in Q4 or later,” Sweeney explained.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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