Dow closes more than 300 points lower amid fears virus resurgence could slow down economic recovery

FAN Editor

Stocks fell on Thursday as an increasing number of U.S. coronavirus cases raised concerns over the health of the economy heading into year-end.

The Dow Jones Industrial Average traded 460 points lower, or 1.6%. The S&P 500 slid 1.4%, and the Nasdaq Composite dropped 0.8%. Thursday’s decline left the S&P 500 just 0.4% above its Friday closing level of 3,509.44, close to wiping out the index’s vaccine rally.

The major averages turned sharply lower after Federal Reserve Chairman Jerome Powell said the U.S. economic outlook remained uncertain even after positive vaccine news from earlier this week.

“From our standpoint, it’s just too soon to assess with any confidence the implications of the news for the path of the economy, especially in the near term,” Powell said regarding the vaccine. “With the virus spreading, the next few months could be challenging.”

Thursday’s moves came as the number of coronavirus cases continues to rise. On Wednesday alone, a record of more than 144,000 infections were confirmed in the U.S., bringing the nationwide tally to more than 10 million. Chicago issued a stay-at-home advisory Thursday aimed to curb the spread, while New York has imposed a new curfew on restaurants, bars and gyms.

“With several of the early November catalysts out of the way, the market does appear to be expressing concern with some of the near-term COVID trends which have seen the US report record case counts and eight consecutive days of over 100k new cases,” said Yousef Abbasi, global market strategist at StoneX, in a note.

Travel and bank stocks were among the biggest laggards on Thursday. United Airlines fell more than 4%, while Carnival dropped 7.2%. JPMorgan Chase, Citigroup and Wells Fargo were all down more than 1%.

Earlier this week, stocks dependent on an economic recovery rallied, sparked by an announcement from Pfizer and BioNTech that the companies’ Covid-19 vaccine candidate appeared to be more than 90% effective in its phase three trial.

More positive news on the vaccine front could come soon, as Moderna announced on Wednesday evening that its phase-three trial had accrued enough cases of the coronavirus to submit the preliminary results to an independent safety monitoring board.

The rally for equities after the Pfizer news followed a strong election week for stocks. Rick Rieder, head of the global allocation team at BlackRock, said Wednesday on “Closing Bell” that he expected stocks to continue to rise through the end of the year, though he expected trading to be choppy.

He also said he expected the economic recovery to continue despite the rise in Covid-19 cases.

“The Fed is going to stay in this accommodative mode for a period of time,” Rieder said. “When you put that much stimulus in, you put that much liquidity in, and then you add fiscal stimulus … the economy will actually do pretty well.”

But CNBC’s Jim Cramer thinks some on Wall Street have become too optimistic about the market given the recent increase in Covid-19 infections.

“I think there’s too many people who are positive,” Cramer said on “Squawk Box.” “Shouldn’t we just be thinking about what happens when all these businesses close?” he said, referencing the potential for lockdown measures being implemented to curb the outbreak.

On the data front, initial weekly jobless claims fell last week to 709,000 from 757,000 in the prior week, the Labor Department said Thursday. That market the fourth straight weekly decline for initial claims.

Free America Network Articles

Leave a Reply

Next Post

How Domino's plans to mitigate the cost of rising minimum wages

Kennedy and the Party Panel discuss the various state measures on the ballot this year. Pizza restaurant Domino’s is relying on an existing strategy to combat minimum wage hikes in states throughout the U.S., in addition to the possibility of a potential nationwide increase under President-elect Joe Biden. Continue Reading […]