DOW PLUNGES 1,500 PTS ON FEARS OF NEW VIRUS WAVE, FED'S OUTLOOK

US stocks tumbled on Thursday, sending the Dow Jones Industrial Average sliding more than 1,500 points as Covid-19 cases increased in some states that are reopening after lockdowns. The 30-stock Dow traded 1,544 points, or 5.7 per cent, lower as of 10: 30 pm (IST). The S&P 500 slid 4.5 per cent while the Nasdaq Composite dropped 3.8 per cent in intra-day trade. Thursday’s losses also put the Dow on pace for its first three-day losing streak in a month. The S&P 500 was headed for its longest losing streak since early March.

Shares across the world took their biggest tumble in five weeks on Thursday, as a sobering outlook from the US Federal Reserve challenged market optimism on the global economy.

Meanwhile, bonds rallied on bets that further stimulus would be needed to ensure recovery. In a reality check to the stock market’s recent euphoria, the Fed predicted that the US economy would shrink 6.5 per cent in 2020, and that unemployment would still be at 9.3 per cent at the year’s end.

The S&P500 and Dow Jones hit their one-week lows, after a sharp climb over the past month. At 11:45 pm (IST), the Dow Jones Industrial Average was down 1,497.04 points, or

5.55 per cent, to 25,492.95, while the S&P500 fell 152.86 points, or 4.79 per cent, to 3,037.28. The Nasdaq Composite was down 420.48 points, or 4.20 per cent, to 9,599.87.

Wall Street’s fear gauge — the CBOE volatility index — hit its highest level since May 15. Banking stocks, which tend to benefit in a high-rate environment, slipped 4.8 per cent, extending losses after Fed policymakers saw key overnight interest rates remaining near zero through at least 2022.

“The market had earlier been rallying because they’re looking to 2021 and saying ‘we’re going to get past this and then things will sort of get back to normal’. One thing that really could change the trajectory here would be if we have a big bounce in a second wave. That’s the big fear,” said Sean O’hara, president of Pacer ETF Distributors in Malvern (Pennsylvania).

Europe’s main bourses, too, opened with heavy losses. In Europe, France’s CAC 40 was 2.6 per cent lower at 4,923, while Germany’s DAX dropped 2.6 per cent to 12,203. Britain’s FTSE 100, too, fell 2.4 per cent to 6,179. SGX Nifty on Thursday slipped 538.20 points, or 5.32 per cent, to 9,580.5.

SGX Nifty on Thursday slipped 538 pts, or 5.32%, to 9,580.5