Dow dives more than 900 points as US virus cases surpass 200,000

United States stock markets on Wednesday kicked off the second quarter in the red, with all three major indexes closing down sharply after the number of confirmed cases of COVID-19 in the US surpassed 200,000.

The Dow Jones Industrial Average lost 973.65 points, or 4.44 percent, to finish at 20,943.41. The broader S&P 500 – a gauge for the performance of US retirement and college savings plans – closed down 4.41 percent, while the Nasdaq Composite Index finished the session down 4.41 percent. 

The number of confirmed cases of COVID-19 in the US climbed to 203,608 on Wednesday, according to Johns Hopkins University, while the US death toll from the virus rose to 4,542.

On Tuesday, the White House predicted that 100,000 to 240,000 Americans could die from COVID-19 and President Donald Trump warned that the country should prepare for what could be “a hell of a bad two weeks” as fatalities peak. 

Also on Tuesday, United Nations Secretary-General Antonio Guterres called on nations around the world to defeat the virus and “tackle the devastating social and economic dimensions” of the crisis by focusing on “the most affected: women, older persons, youth, low-wage workers, small and medium enterprises, the informal sector and vulnerable groups, especially those in humanitarian and conflict settings”.

The dire warnings from officials set an ominous tone for the start of a new quarter the day after the Dow and S&P closed out their worst first quarters ever. 

Investors, businesses, policymakers and individuals are still struggling to get to grips with how profoundly the pandemic is altering the US and global economies.

More than 80 percent of Americans have been ordered to lock down to stem the spread of the disease. 

A survey of factory activity released on Wednesday by the Institute for Supply Management showed that US manufacturing contracted marginally in March, but that new orders fell to an 11-year low, bolstering forecasts that the US is already in the throes of a recession. 

Investors will be watching closely on Thursday when the US Department of Labor releases initial jobless claims numbers. A record 3.3 million Americans filed for unemployment benefits in the week ending March 21 as businesses shuttered and laid off workers.

Many economists expect Thursday’s report will blow away that historic number. 

The US government passed a record-breaking $2.2 trillion coronavirus relief package last week to help individuals, families, industries, state and local governments and businesses great and small weather the crisis, while the US Federal Reserve has pumped trillions of dollars into the credit markets and innovated new tools to keep financial markets from derailing. 

Democratic legislators are drafting plans for a fourth coronavirus-related stimulus bill, while Trump on Tuesday took to Twitter to press for $2 trillion in spending on upgrading the nation’s infrastructure. 

Meanwhile, economists continue to revise their outlooks for US and global growth as they grasp for comparisons to describe the economic carnage wrought by the crisis.

On Tuesday, analysts at Capital Economics wrote in a note to clients: “Given the lockdowns in place across much of the world, we have downgraded our forecasts further in recent days, with the result that we now expect global real GDP [gross domestic product] to fall by over 3% this year. That compares with our pre-virus forecast that it would grow by about 3%. This means that 2020 is set to be the worst year for the global economy since the end of the Second World War, when world GDP in 1945 plunged by 5.5%.”