Dow plunges more than 1,300 points at open as coronavirus fears return
US stocks tumbled again Wednesday, continuing another volatile week on Wall Street as fears loomed about the coronavirus kneecapping the economy.
The Dow Jones industrial average plunged as much as 1,365.93 points, or 6.4 percent, to 19,871.45 in early trading as investors continued to wait for Washington to deliver a fiscal stimulus to blunt the pandemic’s economic impact. The S&P 500 and the Nasdaq composite similarly sank 5.5 and 5.9 percent, respectively, after the opening bell.
Stocks had surged Tuesday as the Trump administration pushed for a coronavirus spending package that could grow to more than $1 trillion. But those hopes appeared to fade Wednesday as the number of cases worldwide surpassed 200,000 and millions of people remained shut in their homes.
“Economic activity will be significantly suppressed as long as social distancing measures are in place,” said David Bahnsen, chief investment officer at The Bahnsen Group. “I don’t know when the stock market will discount the future in a positive way and I don’t know when the future itself will become positive.”
The coronavirus crisis has raised fears about the global economy entering a recession, given that measures taken to slow its spread have dampened consumer spending, forced some businesses to close and greatly reduced travel around the world.
The panic reached a fever pitch on Wall Street early this week, leading the Dow to shed nearly 3,000 points on Monday and drop below 20,000 for the first time in three years Tuesday morning.
The White House this week proposed aggressive measures to shore up the US economy, including cash payments to struggling Americans, deferrals for tax payments and direct aid to pandemic-battered industries such as airlines. Those would complement the Federal Reserve’s moves to slash interest rates to near zero and restart its bond-buying program known as quantitative easing.
But it’s unclear how quickly Congress will pass a stimulus package and unlikely that the virus will abate as lawmakers negotiate over what steps to take.
“The crisis is not over,” Brad McMillan, chief investment officer at the Commonwealth Financial Network, wrote in a Tuesday commentary. “We can certainly expect the headlines to keep screaming and even get worse over the next couple of weeks, which could keep markets turbulent.”
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