Associated Press
- US stocks tanked on Thursday as cautious commentary from the Federal Reserve and rising coronavirus infection rates prompted investor concern.
- All three major indexes posted their biggest single-day declines since March 16.
- Texas, Florida, Arizona, and California all reported strong upticks in case counts or hospitalizations, increasing fears of a second wave of COVID-19 infections.
- The Federal Reserve said on Wednesday that the pandemic could result in permanent economic damage and an extended period of high unemployment.
- Oil dove as well, with West Texas Intermediate crude trading as much as 11% lower.
- Watch major indexes update live here.
US equities plummeted on Thursday as investors grew warier of rising coronavirus case counts and mulled cautious commentary from the Federal Reserve. All three major indexes posted their biggest single-day declines since March 16.
A much-feared second wave of COVID-19 infections is becoming likelier in some states as reopening efforts continue. Texas reported its third straight day of record coronavirus hospitalizations, while Florida notched its worst weekly increase in cases. Arizona and California also revealed spikes in new cases. The surging case counts pushed the US total above 2 million.
Traders also weighed Fed Chair Jerome Powell’s comments on Wednesday; he said the pandemic could result in permanent economic damage and an extended period of high unemployment. He cautioned that, despite May’s better-than-expected jobs report, “it’s a long road” to a labor-market recovery.
Still, the Fed signaled a willingness to continue economic stimulus efforts, saying it would leave rates near zero and continue multibillion-dollar bond purchases.
Here’s where US indexes stood at the 4 p.m. ET market close on Thursday:
The Dow’s slump marked its worst day since April, reviving market volatility not seen since the initial upswing from coronavirus-induced lows.
“We were probably due for a 5% or 10% correction, but obviously I didn’t expect that to happen in one day,” Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research, told Business Insider.
He continued: “When you get a day like today, it’s one of those times that tends to scare people who don’t have a lot of experience in this. So the selling begets more selling, which begets more selling.”
Though surging COVID cases raised fears of a prolonged recession, the White House stamped out the possibility of another nationwide lockdown. Treasury Secretary Steven Mnuchin told CNBC on Thursday “we can’t shut down the economy again,” adding “you’re going to create more damage” with such an action.
Weekly jobless-claims data released on Thursday backed up Powell’s gloomy sentiment. Roughly 1.5 million Americans filed for unemployment insurance last week, the Labor Department said. The reading brought the 12-week total to 44 million. Continuing claims, or the number of Americans receiving unemployment benefits, slid slightly from the previous week, to 20.9 million.
Some of the day’s biggest losers were those that gained the most on reopening hopes. Carnival Cruises, Royal Caribbean, and Norwegian Cruise Line all plunged. Airline stocks including Delta, American, and United slid sharply as well. Gap and Kohl’s were among the biggest losers in the retail sector.
Early moves in the Cboe Volatility Index mirrored the stock market’s sharp downturn. The VIX, known as the stock market “fear gauge,” spiked as much as 54% Thursday, breaching the 40 threshold for the first time since late April.
Oil tanked through the session amid the wider risk-off attitude. West Texas Intermediate crude sank as much as 11%, to $35.41 per barrel. Brent crude, the international benchmark, slumped 9.4%, to $37.82, at intraday lows.
Carmen Reinicke contributed to this report.
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