Stocks and bond yields fell sharply on Wall Street in early trading Thursday as optimism that the reopening of businesses would drive a relatively quick economic recovery fades amid rising coronavirus cases in many US states and countries.
All three major US stock indexes were down about 5%, posting their worst day since mid-March, when markets were sent into freefall by the abrupt economic lockdowns put in place to contain the pandemic. The Nasdaq snapped a three-day streak of record closing highs.
Bourses in Paris, Frankfurt and London all plunged at least four percent.
“The market got too far ahead of itself,” said Markets.com analyst Neil Wilson.
In the US, stocks have followed a fairly unbroken path higher from the market’s worst days in March, fueled by optimism over the reopening US economy and the expected boost from aggressive stimulus measures approved in Washington.
But US Federal Reserve Chief Jerome Powell offered a sober outlook on the US economy during a press conference Wednesday after the central bank signaled it planes to keep interest rates low for the next few years in light of the shaky recovery.
Analysts also fixated on increasingly worrisome trends on new coronavirus cases in several states, including Florida, Arizona and Texas.
Deaths of Americans from COVID-19 could reach 200,000 in September, a grim result of the United States’ economic re-opening before getting growth of new cases down to a controllable level, according to a leading health expert.
The US Labor Department said Thursday that about 1.5 million people applied for US unemployment benefits last week, another sign that many Americans are still losing their jobs even as the economy begins to gradually reopen.
The latest figure marked the 10th straight weekly decline in applications for jobless aid since they peaked in mid-March when the coronavirus hit hard. Still, the pace of layoffs remains historically high.
Economic data appeared to back up the Fed’s gloomy economic projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.
Source: Agenceis
