Dow Jones falls 1,800 points on Covid-19 case rally. The stock price on Wall Street plummeted on Thursday after rebounding cases of coronavirus in the United States, hitting recent optimism that the economy could quickly recover from its worst crisis in decades.
Miami World / AP
The Dow Jones index fell more than 1,800 points and the S&P 500 lost 5.9%, its worst day since mid-March, when the stock market suffered a series of horrible declines as the pandemic closings began.
Many analysts have been saying that the surprising market recovery since the end of March was disproportionate and did not reflect the poor state of the economy. The S&P 500 added 44.5% between the end of March and Monday.
The number of coronavirus cases rebounded in the country, and part of the increase is possibly linked to the reopening of shops and the end of confinement orders. Infections are on the rise in nearly half of the states, according to an analysis by The Associated Press, a disturbing trend that could escalate as people return to work and do outdoor activities during the summer.
Investor optimism about a rapid recovery in the economy also had to moderate after the announcement by the Federal Reserve on Wednesday, which warned that the path out of the worst crisis in decades would be a long one and vowed to keep rates low. of interest in the immediate future.
These factors, coupled with the recent increase in share prices, contributed to Thursday’s sales, said Sal Bruno, chief investment officer at IndexIQ.
“It is not surprising to see a certain trend in sales, considering the long bullish streak we had despite the economy not doing very well,” said Bruno. “The fact that (the Fed) is talking about keeping interest rates so low until the end of 2022 was revealing to many.”
The S&P 500 fell 188.04 units to 3,002.10, its biggest decline since March 16. The Dow lost 1,861.82 points, 6.9%, and was located at 25,128.17. And the Nasdaq compound, which on the eve had exceeded the threshold of 10,000 points for the first time, yielded 527.62 integers, 5.3%, ending at 9,492.73.
Small company stocks continued to be top sellers, in a sign that investors are becoming more pessimistic about the overall recovery in the economy. The Russell 2000 indicator lost 111.17 units, 7.6%, and stood at 1,356.22.
Crude prices fell 8.2% due to investor concerns that a bumpy economy requires less energy.
The yield on the 10-year Treasury bond fell to 0.66% from 0.74%. Last Friday it briefly exceeded the 0.90% threshold, and started the year at 1.92%.