Wall Street plummeted on Thursday as investors reacted to renewed fears of a coronavirus pandemic resurgence and digested gloomy economic forecasts from the United States Federal Reserve. All three major US stock indexes were down more than five percent. It was 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 Dow Jones Industrial Average fell 6.90 percent to end at 25,132.25 points. The widely used gauge of US retirement and education savings accounts, the S&P 500 lost 5.89 percent. The tech-heavy Nasdaq Composite Index dropped 5.27 percent.
“There’s really no buy point,” said Paul Nolte, portfolio manager at Kingsview Partners in Chicago. “It’s pretty much selling all the way through.”
Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, agreed.
“Everything’s for sale,” Ghriskey added. “There’s fear we’re near a top.”
Deaths of Americans from COVID-19 could reach 200,000 in September, a grim result of the US economic reopening before getting growth of new cases down to a controllable level, according to a leading health expert.
At the conclusion of its two-day monetary policy meeting on Wednesday, the US Federal Reserve released its first pandemic-era economic outlook, after which Fed Chair Jerome Powell warned of a “long road” to recovery.
“The Fed keeping rates steady through 2022 could give investors the impression that the Fed may be more concerned about the pace of economic recovery than originally anticipated,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta.
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.
A year-on-year drop in core producer prices also reflected the central bank’s disinflationary concerns.
Interest rate-sensitive banks dropped after the Fed indicated key interest rates would remain near zero through at least 2022.
Travel-related companies, among the hardest hit by mandated lockdowns, were sharply lower.
Boeing Co weighed heaviest on the Dow after its top supplier, Spirit AeroSystems Holdings Inc, announced a 21-day layoff for staff doing production and support work for Boeing’s 737 programme.