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US Stocks Drop 3% on Opening 04/01 09:02
U.S stocks joined a worldwide downdraft Wednesday as more signs piled up of
the economic and physical pain being caused by the coronavirus outbreak.
NEW YORK (AP) -- U.S stocks joined a worldwide downdraft Wednesday as more
signs piled up of the economic and physical pain being caused by the
coronavirus outbreak.
The S&P 500 dropped more than 3% in the first few minutes of trading
President Donald Trump warned the country to brace for "the roughest two or
three weeks we've ever had in our country." The White House is projecting that
100,000 to 240,000 people in the U.S. could die from COVID-19. Long-term
Treasury yields sank as investors moved into safer investments.
Japanese stocks took some of the world's heaviest losses after a survey by
its central bank of large manufacturers fell to its worst result in seven
years. The Nikkei 225 dropped 4.5%. Britain's FTSE 100 was down 3.7% after big
banks there scrapped dividend payments, part of a worldwide effort by companies
and households alike to conserve cash. Germany's DAX lost 4%.
Stocks worldwide have tumbled this year as the coronavirus pandemic forces
economies into what is expected to be a steep, sudden recession. The S&P 500
just closed out its worst quarter since 2008 with a 20% loss.
Businesses are shutting down, and people are staying at home in hopes of
slowing the spread of the virus. It's the economic equivalent of putting a
patient in a medically induced coma, said Anwiti Bahuguna, head of multi asset
strategy at Columbia Threadneedle Investments: "a calculated, temporary risk
with the goal of establishing greater longer-term health."
The problem for investors is that no one knows how long the coma will last
and how severe the damage will be during it.
A report on Wednesday said that private U.S. employers cut 27,000 jobs last
month, which was actually much milder than the 200,000 that economists were
expecting. The survey from payroll processor ADP used data from the week ending
March 14, which was before the number of people seeking unemployment benefits
exploded to a record. Economists continue to expect Friday's more comprehensive
jobs report from the government to be dismal.
The number of infections keeps rising, which worsens the uncertainty. The
United States has more than 189,000 cases, according to a tally by Johns
Hopkins University. That leads the world, which has more than 877,000 confirmed
cases.
For most people, the coronavirus causes mild or moderate symptoms, such as
fever and cough that clear up in two to three weeks. For some, especially older
adults and people with existing health problems, it can cause more severe
illness, including pneumonia, and death.
More than 43,000 people have died from the virus, while more than 185,000
have recovered.
Stocks had cut some of their severe losses in recent weeks as Washington
swooped in with aid for the economy and markets.
The S&P 500 jumped nearly 18% in just three days last week as Congress
struck a deal on a $2.2 trillion rescue package for the economy and the Federal
Reserve promised to buy as many Treasurys as it takes to get lending markets
running smoothly.
House Democrats are already collecting ideas for a possible fourth round of
aid for the economy, including extended unemployment benefits and spending on
infrastructure. President Donald Trump has tweeted his support for a $2
trillion infrastructure package, but top Republicans in Congress say they first
want to see how well their just-approved programs do.
The S&P 500 was down 3.2%, as of 9:45 a.m. Eastern time. Of the 500
companies in the index, 496 were lower.
The Dow Jones Industrial Average lost 650 points, or 3%, to 21,258, and the
Nasdaq dropped 2.6%.
The yield on the 10-year Treasury dropped to 0.60% from 0.70% late Tuesday.
A bond's yield drops when its price rises, and investors buy long-term
Treasurys when they're fearful because they see U.S. government bonds as having
virtually no risk of default
Benchmark U.S. crude oil held relatively steady slightly above $20 per
barrel, after it dropped by roughly two thirds in the first three months of the
year.
(CZ)
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