The stock market is on track to record its steepest single-day drop since the start of April, when the coronavirus pandemic took hold in the United States.
The Dow Jones Industrial Average plummeted more than 1,165 points, or 4.3%, in Thursday midday trading — on pace for its first three-day losing streak in a month — while the S&P 500 slid 115 points, or 3.6%. Meanwhile, the Nasdaq Composite fell 270 points, or 2.7%. Investors have expressed concerns over a second wave of coronavirus infections and the Federal Reserve’s bleak outlook for the economy.
Over the past month, state and local governments have eased lockdowns that were put in place to help prevent the spread of COVID-19, which has sickened more than two million people across the country and killed at least 113,000. Hopes of a rebounding economy — bolstered by massive stimulus packages and a promising jobs report for May — led the stock market to show signs of recovery from March’s and April’s selloff.
However, renewed fears over another surge in COVID-19 outbreak have flared up following reports of more confirmed cases: In Texas, health authorities reported the third consecutive day of record-high hospitalizations. Nine counties in California have also seen a spike in new infections, while cases in Arizona have nearly doubled in two weeks.
What’s more, the central bank — which voted on Wednesday to keep interest rates near zero — warned that it could take a long time for the U.S. economy to bounce back to pre-pandemic levels. “The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term,” its statement read.
Today, President Donald Trump challenged the Fed’s outlook, writing in a tweet that the bank is “wrong so often” and that 2021 will be “one of our best ever years.” Additionally, Treasury Secretary Steven Mnuchin told CNBC in an interview that shutting down the economy for a second time isn’t a viable option and said that he was prepared to go back to Congress to request more funds to support the virus-besieged economy.
The stock market’s downward trend comes on the same day that the Department of Labor reported another 1.54 million jobless claims filed last week. The figure pushes the 12-week total to more than 44 million unemployment applications. (Although weekly initial claims have decelerated for 10 consecutive weeks, the volume of filings remains more than double the worst week during the Great Recession.)