Dow drops over 800 points after US warning on coronavirus death toll
Stocks tumbled again Wednesday as Wall Street grappled with the Trump administration’s warning that the US has yet to face the worst of the coronavirus crisis.
The Dow Jones industrial average dropped as much as 895.16 points, or 4 percent, at the open after the White House projected the deadly virus could kill as many as 240,000 people even if social-distancing protocols are followed.
The plummet came after the blue-chip index closed out its worst first quarter on record by dropping 410 points on Tuesday. The S&P 500 and Nasdaq Composite also fell further Wednesday, dropping as much as 2.9 and 3.1 percent, respectively, in early trading.
“This is a huge change in tone from the president who has failed to grasp the true horror of the coronavirus in the past, repeatedly claiming it will be defeated very soon,” wrote Craig Erlam, senior currency analyst at OANDA, in a commentary. “As we enter a rapid acceleration phase in the US which brings enormous uncertainty, the bullish case for stock markets is a little weak and we could see the rally quickly run out of steam.”
The federal government’s grim predictions appeared to dampen last week’s jumps on Wall Street, which were spurred by Congress passing a $2 trillion stimulus package to blunt the economic impact of the coronavirus pandemic.
In a sign that investors are once again growing worried, the CBOE Volatility Index — known as Wall Street’s fear gauge — jumped 4.8 percent Wednesday morning to 56.16. The index hit an all-time closing high of 82.69 last month.
President Trump’s warning that the nation is in for a “rough two weeks” came as much of the US economy remains at a standstill thanks to governments forcing businesses to close and urging consumers to stay at home. That massive slowdown in economic activity has sparked fears of a deep recession.
“Most of the world is currently in phase one: lockdown,” said Nigel Green, founder and CEO of the deVere Group. “The unprecedented lockdown measures are, of course, dramatically slowing economies as both supply and demand are hit.”
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