Stocks swing wildly and close higher: March 10, 2020

By CNN Business

Updated 7:58 p.m. ET, March 10, 2020
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12:18 p.m. ET, March 10, 2020

Buffett-backed shale giant slashes dividend by 86% to cope with oil crash

From CNN Business' Matt Egan

The reckoning is coming to the oil patch.

Occidental Petroleum (OXY), the shale oil giant that piled on debt to acquire Anadarko Petroleum last year, said Tuesday it will slash its dividend by 86%.

Occidental, which is backed by billionaires Warren Buffett and Carl Icahn, is also cutting its 2020 capital spending to a range of $3.5 billion to $3.7 billion. That's well below its earlier plan of up to $5.4 billion.

Echoing comments made earlier in the day by rival Chevron, Occidental said it will implement cost-cutting moves.

Taken together, Occidental said the moves will drop its cash flow breakeven level to the low $30s.

The cuts come after US oil prices crashed 26% to $31.13 a barrel on Monday. It was the worst day for oil since 1991.

"Due to the sharp decline in global commodity prices, we are taking actions that will strengthen our balance sheet and continue to reduce debt,” Occidental CEO Vicki Hollub said in the statement.

Icahn repeatedly warned last year that Occidental's takeover of Anadarko would backfire, forcing the company to cut its dividend if oil prices tumbled. That warning has now borne out.

12:04 p.m. ET, March 10, 2020

S&P 500 turns negative too

From CNN Business' Anneken Tappe

This rebound rally is fizzling out.

Shortly after the Dow dropped into the red, the S&P 500 turned negative. The S&P, which is the broadest measure of US stocks, was last flipping between slight gains and losses around the unchanged level. The Dow was last down 0.3%.

The S&P recorded its worst day since December 2008 Monday. The steep selloff led the S&P to trip a circuit breaker that led the New York Stock Exchange to briefly suspend trading.

Both indexes are very close to bear-market territory, which is defined as 20% below their most recent peaks. At Monday's close, the S&P and Dow were roughly 19% off their highs.

The Nasdaq Composite also pared its earlier gains.

Stocks could be reacting to news on the oil front. Monday's selloff was in part a response to a collapse in oil prices.

Saudi Aramco on Tuesday vowed to up production to 12.3 million barrels a day in April, which would be 27% above recent levels and exceed the company's maximum capacity by 300,000 barrels.

11:37 a.m. ET, March 10, 2020

No brainer: Trump administration nixes plan to sell 12 million barrels of oil

From CNN Business' Matt Egan

The Trump administration has scrapped a move that could have added to the chaos in the oil market.

The Energy Department said Tuesday that it is suspending plans to sell up to 12 million barrels of oil from America's emergency crude stockpile, known as the Strategic Petroleum Reserve.

"Given current oil markets, this is not the optimal time for the sale," the agency said in a statement.

That is an understatement.

A toxic mix of excess supply and diminished demand has set off an historic collapse in oil prices. Crude crashed by 26% Monday, its worst day since 1991, after Saudi Arabia launched a price war against its onetime ally Russia.

Adding more supply from the SPR would have only exacerbated those conditions, as it would have raised revenue intended for facility maintenance and upgrades.

But the timing was always questionable. The Energy Department announced the planned sale in in late February when oil markets were already in a painful bear market.

11:55 a.m. ET, March 10, 2020

Dow turns negative

From CNN Business' Anneken Tappe

OK, so, about that stock rally....

The three major indexes have pulled way, way back from their session highs.

The Dow, which rallied nearly 946 points, was last down about 60 points, or 0.2%.

The S&P 500 -- the broadest measure of the US stock market -- was up 0.1%.

The Nasdaq Composite was up 0.5%.

All three benchmarks staged a sharp rebound this morning after recording their worst days since 2008 yesterday.

"Today’s turnaround may have been a bit excessively premature as much of that rally was attributed to optimism that the Trump administration will shortly have major stimulus announcements," said Edward Moya, senior market analyst at Oanda.

The White House wants a fiscal stimulus package including a payroll tax cut and paid sick leave, but Congress has yet to be part of the conversation.

10:56 a.m. ET, March 10, 2020

Trump criticizes Fed response -- again

From CNN Business' Anneken Tappe

President Donald Trump has long been critical of the Federal Reserve and Chairman Jerome Powell. So it's no surprise that the president once again aired his thoughts on Twitter Tuesday amid wild market swings.

The central banks "must be a leader, not a very late follower, which it has been," Trump added in a follow-up tweet.

The Fed cut interest rates by a half-percentage point last week, in its first unscheduled monetary policy action since the financial crisis. Given decent economic growth and a strong labor market, with unemployment near a 50-year low, the rate cut has widely been considered another "insurance" cut.

That said, the market expects rates will come down further. The CME's FedWatch Tool shows a near-60% chance of another half-point cut at next week's regularly scheduled Fed meeting.

Last year, the Fed cut interest rates three times to stave off negative effects from the US-China trade war.

10:54 a.m. ET, March 10, 2020

Chevron warns of spending cuts after worst day since Black Monday

From CNN Business' Matt Egan

The oil crash is already forcing Big Oil to consider hunkering down.

Chevron, America's No. 2 oil company, said Tuesday it is considering spending cuts that would lower its short-term oil production.

The oil giant said in a statement it's "already sharpening our focus" on reducing costs by targeting $2 billion in savings. Chevron (CVX) did not say whether that would include layoffs.

Monday's collapse in oil prices -- crude's worst day since 1991 -- will undoubtedly cause companies to abandon some shale oil projects that have suddenly become unprofitable. Chevron has spent heavily in recent years to build a powerful presence in the Permian Basin shale oilfield of West Texas.

"The impact of lower prices is clearly felt across the US energy industry," Chevron said. "It is difficult to predict how this will play out in the weeks and months ahead. Chevron has seen similar downturns before and is well positioned for a low price environment."

Wall Street seemed less certain of that Monday.

Chevron plummeted 15%, its worst day since the Black Monday crash of October 1987 as part of a sharp decline throughout the energy industry. Chevron climbed 5% Tuesday as oil prices jumped 8%.

10:35 a.m. ET, March 10, 2020

Oil rebound continues

From CNN Business' Anneken Tappe

Oil prices keep crawling back from yesterday's steep losses.

US oil was up 8.5% at $33.79 per barrel, following a whopping 26% drop Monday.

The global oil benchmark Brent Crude was up about 7.9% at $37.08 a barrel. Brent had plunged 24% yesterday.

US oil prices have collapsed more than 40% since the start of the year. Although it's not the first time commodities have been hit this hard, the low prices are here to stay, according to Samuel Burman, assistant commodities economist at Capital Economics.

This week's oil collapse is different than the 2008 or 2015-16 selloffs, which were driven by worries about a drop in demand associated with a decline in economic activity.

Key differences include that "until there are signs that the virus is being brought under control, and that containment measures are being lifted, policy stimulus is unlikely to boost global economic activity and thus oil demand," said Burman.

The collapse of OPEC talks last week mean that oil supply will also increase, making matters worse.

10:10 a.m. ET, March 10, 2020

Jeff Bezos and Bill Gates lost more than $10 billion yesterday

From CNN Business' Jordan Valinsky

Monday's market rout was bad for everyone, but the losses were especially eye-popping for the world's two richest men.

Amazon (AMZN) founder and CEO Jeff Bezos lost $5.5 billion, while Microsoft (MSFT) founder saw $5.1 billion disappear from his fortune. The pair have lost a combined $10 billion this year as of yesterday's close, according to Bloomberg's Billionaire Index.

But things are looking up for the billionaires. With stocks rebounding, Forbes' real-time index forecasts them recouping some of those losses.

9:59 a.m. ET, March 10, 2020

Stocks rebound from worst day since 2008

From CNN Business' Anneken Tappe

US stocks rallied at Tuesday’s opening bell. The market is set to rebound from its worst day since 2008, which included the worst point-drop on record for the Dow.

Stocks bounced back after the White House indicated it will propose a payroll tax cut to ease the burden from the coronavirus fallout.