Stocks crater as virus’ toll climbs
Stocks on Wall Street and around the world fell sharply Wednesday as the economic and physical toll caused by the coronavirus pandemic mounts — and as experts say they still can’t predict when it will end.
The Standard & Poor’s 500 index, Dow Jones industrial average and Nasdaq composite each dropped 4.4% after the White House said 100,000 to 240,000 Americans could die of COVID-19 even if the country follows guidelines to avoid shopping trips, eating out and other activities through April.
Florida’s governor became the latest to issue a statewide stay-at-home order.
Such restrictions have already deeply gashed the economy. Whiting Petroleum, one of the biggest drillers in the Bakken shale formation, filed for Chapter 11 bankruptcy protection Wednesday, with the price of oil near $20 a barrel.
Automakers reported sharp drops in U.S. sales for March, including a 43% plunge for Hyundai. Mortgage applications tumbled 24% from year-earlier levels as open houses all but ceased.
The S&P 500 index fell 114.09 points to 2,470.50, and all 11 sectors that make up the index declined.
“There is a lot of uncertainty,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “The negative news is really taking over.”
The negative news was also global. Japanese stocks took some of the world’s heaviest losses, down 4.5%, after a survey of business sentiment there fell to its worst level in seven years. Britain’s FTSE 100 fell 3.8% after big banks there scrapped dividend payments, part of a worldwide effort by companies and households to conserve cash.
Stocks have plunged this year as the coronavirus pandemic forces economies into what is expected to be a steep, sudden recession. The S&P 500 index dropped 20% during the quarter that ended Tuesday — its worst quarter since 2008.
“The challenge for investors is you don’t know how deep and how wide this downturn may be,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “It ends up being a true leap of faith that the forecast and the duration of the pandemic will be accurate.”
A report out Wednesday said that private U.S. employers cut 27,000 jobs last month, which was a much smaller drop than economists were expecting. The survey used data from March before the number of Americans seeking unemployment benefits exploded to record highs.
Even Friday’s more comprehensive jobs report from the government may not show the full scale of the layoffs sweeping the country, said Rhea Thomas, senior economist at Wilmington Trust. Small businesses are seeing the sharpest declines, and some companies that closed may not be responding to the survey.
The government’s weekly jobless claims report may offer a better view. The next batch of numbers comes out Thursday, and economists say it could blow past last week’s total of nearly 3.3 million initial claims, which itself was quintuple the prior record.
The number of infections keeps rising, which worsens the uncertainty.
The United States has more than 213,000 cases, according to a tally by Johns Hopkins University. That leads the world, which has more than 935,000 confirmed cases.