U.S. stocks tank as grim news mounts on health, economic fronts
Wall Street began a new quarter on a grim note Wednesday, with stocks tanking after President Trump told the country to prepare for "a hell of a bad two weeks" as deaths from the novel coronavirus accelerate.
Dow Jones industrial average sank more than 800 points, or 3.8%.
"Stock investors are starting the second quarter bracing for a tsunami of terrible news on the health and economic fronts of the war against the virus," Ed Yardeni, president of Yardeni Research, told The Washington Post. "The White House warned yesterday that the number of deaths will rise sharply over the next two weeks."
Trump and the physicians advising the federal pandemic response on Tuesday delivered a bleak outlook for the novel coronavirus's spread across the country, predicting a best-case scenario of 100,000 to 240,000 fatalities in the United States.
"The next batch of economic Indicators will undoubtedly show rapidly rising job losses and falling economic activity," Yardeni said.
"In the upcoming earnings season, most corporate managements will have nothing to offer but uncertainty about how bad their results will be over the rest of the year,"After accentuating the positives in the war against the virus last week and rotating out of bonds and into cheap stocks, investors are hunkering down in the trenches again."
The Dow capped its worst-ever first quarter on Tuesday with a 400-point, or 1.9%, loss. The blue chips erased 24% of their value in the three-month period, and 17.9% in March alone.
All but five of the Dow 30 finished in the red Tuesday. American Express, Home Depot and Procter & Gamble were the big losers. Energy was the lone S&P sector that was in the positive column as oil prices rallied a bit in the midst of the worst month and quarter in oil price history. The hibernating economy, combined with oversupplied oil markets, has sent the price of a barrel of oil to levels not seen in at least 20 years.
It also was a record bad quarter for the S&P 500, which is down 20% this year and 24% from the all-time high it set Feb. 19. The broad index stumbled 42 points, or 1.6%, to close Tuesday at 2,584.59.
The Nasdaq closed out the three-month period at 7,700.10, falling nearly 1% on the day and 14% for 2020.
But investors had been given some optimistic signs Tuesday that pointed briefly to a V- or U-shaped recovery by late summer. Consumer confidence fell, but not as sharply as expected. Oil for most of the day was climbing, a signal of consumer demand, until those advances were washed out. Goldman Sachs forecast a troublesome second quarter - with as much as 15% unemployment in the late spring and early summer - but a ferocious comeback when the economy zooms back to normal.
Analysts cautioned that more volatility was in the cards, and as public health experts and the president announced that New York had become the virus's global epicenter, with more total infections than China's Hubei province, where covid-19 was first detected.
Overseas markets also posted significant losses. Germany's DAX dropped 357 points, or 3.6% and London's FTSE shed 3.5%. The Hang Sang index in Hong Kong fell 517 points, or 2.2%, and the Nikkei in Japan fell 4.5%. India's BSE Sensex lost 4.1%.
