As US COVID-19 Cases Rise, Dow Falls More Than 700 Points.

As US COVID-19 Cases Rise, Dow Falls More Than 700 Points.

As US COVID-19 Cases Rise, Dow Falls More Than 700 Points.
As US COVID-19 Cases Rise, Dow Falls More Than 700 Points.

 


The divergence between Main Street market realities and buoyant Wall Street market gains narrowed a little on Wednesday, as investor optimism soured in the wake of a spike in COVID-19 cases in parts of the United States.

 

The Dow Jones Industrial Average closed down more than 710 points or 2.72 percent to end the session at 25,445.94. All 30 Dow component stocks ended in the red.

 

The S&P 500 – a proxy for the health of US retirement and college savings accounts – finished the session down 80 points or 2.58 percent.

 

The Nasdaq Composite Index, which closed at a record high on Tuesday, ended its nine-day winning streak – its longest so far this year – to close down 222 points or 2.19 percent.

 

Investors are concerned that a surge in coronavirus cases in parts of the US could slow – or in some cases reverse – plans to reopen the economy.

 

The US has recorded the second-largest rise in infections since the coronavirus pandemic began, as states started rolling back lockdown restrictions.

 

The governors of New York, New Jersey, and Connecticut announced that visitors from states with high coronavirus infection rates must self-quarantine for 14 days on arrival.

Clouds are not only gathering over the US recovery, but the picture for the global economic recovery is also darkening.

 

On Wednesday, the International Monetary Fund (IMF) said it now sees the global economy shrinking 4.9 percent this year – nearly 2 percentage points below its forecast from only two months ago. It also revised its outlook for 2021 down to a rebound of only 5.4 percent – 0.4 percentage points lower than its April forecast and roughly 6 percentage points lower than the pre-pandemic projections made in January.

 

The fund also noted the risks surrounding the divergence between Main Street realities and recent financial market optimism.

 

“The disconnect between real and financial markets raises concerns of excessive risk-taking, and this is a significant vulnerability,” the IMF’s chief economist Gita Gopinath told reporters during a webcast on Wednesday.

 

The specter of escalating transatlantic trade tensions threw yet even more uncertainty into the Wednesday market mix, with the US weighing new tariffs on $3.1bn of exports from France, Germany, Spain, and the United Kingdom.

 

Oil prices were also pressured on Wednesday by mounting recovery concerns and a report that showed US stockpiles of crude hit another record last week.

Global benchmark Brent crude for August delivery briefly fell below $40 a barrel before settling down more than 5 percent at $40.31 a barrel. US benchmark West Texas Intermediate crude for August delivery shed more than 5 percent to settle at $38.01.


Source: Aljazeera.

 

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