Wall Street tumbles as US virus cases pass 100K
NEW YORK: Wall Street stocks tumbled on Friday, ending a massive three-day surge after doubts about the fate of the US economy resurfaced and the number of coronavirus cases in the country climbed.
US stocks deepened their losses late in the session, even after the House of Representatives approved a $2.2 trillion aid package — the largest in American history — to help people and companies cope with an economic downturn caused by the coronavirus outbreak and provide hospitals with urgently needed medical supplies.
The United States has surpassed China and Italy as the country with the most coronavirus cases. The number of US cases passed 100,000, and the death toll exceeded 1,500.
“We have still not fully understood the degree of the economic impact,” warned Massud Ghaussy, analyst at Nasdaq IR Intelligence in New York.
“Currently, from a policymaker’s perspective, it’s a relative balance between managing the spread of the virus and opening the economy’’. After the market closed, President Donald Trump signed the stimulus package into law.
The bill, along with unprecedented policy easing by the Federal Reserve, helped the S&P 500 surge 10.2 per cent for the week, its best week since 2009. But the US stock market benchmark is still down about 25 per cent from its
February high.
In its strongest three-day performance since 1931, the Dow surged 21 per cent in three straight days through Thursday, establishing it in a bull market, according to one widely used definition. Even after Friday’s drop, the Dow ended 12.8 per cent higher, its best week since 1938.
Many investors see a strong risk the market could fall deeply again as coronavirus infections increase and more people die, however.
“Next week will depend on what happens over the weekend,” said Lindsey Bell, Chief Investment Strategist at Ally Invest. “If there is a major acceleration over the weekend of coronavirus cases in New York and other states and the hospital system continues to get jammed up, then I think it will be a rough week for the market.” Macroeconomic indicators offered a glimpse of the economic devastation from the crisis as the lockdown of major cities upends the lives of millions of Americans.
US consumer sentiment dropped to a near 3-1/2-year low in March, according to a survey released on Friday, a day after data showed a record 3 million surge in jobless claims last week.
The Dow Jones Industrial Average slumped 4.06 per cent to end at 21,636.78 points, while the S&P 500 lost 3.37 per cent to 2,541.47.
The Nasdaq Composite dropped 3.79 per cent to 7,502.38.
Volume on US exchanges was 13.4 billion shares, its lowest since March 5, according to Refinitiv data.
Delta Airlines, American Airlines and United Airlines fell between 6 per cent and 11 per cent as US Treasury Secretary Steve Mnuchin said the help designated for airlines in the aid package was not a bailout and that taxpayers would need to be compensated.