The Atlanta Journal-Constitution
STOCKS TUMBLE
Stocks suffered their sharpest daily decline in three months as investors’ confidence was rattled by grim new economic forecasts and a worrisome uptick in coronavirus cases in parts of the United States,
Stocks fell sharply Thursday on Wall Street as coronavirus cases increased again, deflating recent optimism that the economy could recover quickly as lockdowns ease. The Federal Reserve’s warning Wednesday that the road to recovery would be long fed pessimism that drove the Dow down more than 1,800 points. The S&P 500 fell 5.9%, and the Nasdaq composite slipped back under the 10,000 mark a day after topping it.
The situation
Many market watchers have been saying that a scorching comeback in the market since late March was overdone and didn’t reflect the dire state of the economy. The S&P 500 rallied 44.5% between late March and Monday. That, coupled with the recent run-up in stock prices, set the stage for the wave of selling Thursday, said Sal Bruno, chief investment officer at IndexIQ.
Bond yields fell sharply, a sign of increasing caution among investors. The price of oil also dropped as investors again worried that a slumping economy would need less energy.
What it means
“We think the recovery is largely underway, but there is still some considerable uncertainty on the path we have ahead,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “If we see some more follow-on of people coming back to work and consumer sentiment picking up, that will be a positive sign for a faster recovery.”
A report last week showed that the U.S. job market surprisingly strengthened last month as employers added 2.5 million workers to their payrolls. Still, the weekly number of new applications for unemployment benefits, while declining, continues to be in the seven figures.