News | Wall Street: Dow drops 400 points as rising coronavirus cases raise concerns about economy to end 2020
Fred Imbert, Jesse Pound
Stocks fell on Thursday as an increasing number of U.S. coronavirus cases raised concerns over the health of the economy heading into year-end.
The Dow Jones Industrial Average traded 400 points lower, or 1.3%. The S&P 500 slid 1.2%, and the Nasdaq Composite dropped 0.7%.
The major averages hit their lows of the day after Federal Reserve Chairman Jerome Powell said the U.S. economic outlook remained uncertain even after positive vaccine news from earlier this week.
“From our standpoint, it’s just too soon to assess with any confidence the implications of the news for the path of the economy, especially in the near term,” Powell said regarding the vaccine. “With the virus spreading, the next few months could be challenging.”
Thursday’s moves came as the number of coronavirus cases continues to rise. On Wednesday alone, a record of more than 144,000 infections were confirmed in the U.S. The United States has now confirmed more than 10 million cases of the virus and some areas, including New York City and San Francisco, have announced new economic restrictions in an attempt to slow the spread.
“With several of the early November catalysts out of the way, the market does appear to be expressing concern with some of the near-term COVID trends which have seen the US report record case counts and eight consecutive days of over 100k new cases,” said Yousef Abbasi, global market strategist at StoneX, in a note.
Earlier this week, stocks dependent on an economic recovery rallied, sparked by an announcement from Pfizer and BioNTech that the companies’ Covid-19 vaccine candidate appeared to be more than 90% effective in its phase three trial.
More positive news on the vaccine front could come soon, as Moderna announced on Wednesday evening that its phase-three trial had accrued enough cases of the coronavirus to submit the preliminary results to an independent safety monitoring board.
The rally for equities after the Pfizer news followed a strong election week for stocks. Rick Rieder, head of the global allocation team at BlackRock, said Wednesday on “Closing Bell” that he expected stocks to continue to rise through the end of the year, though he expected trading to be choppy.
He also said he expected the economic recovery to continue despite the rise in Covid-19 cases.
“The Fed is going to stay in this accommodative mode for a period of time,” Rieder said. “When you put that much stimulus in, you put that much liquidity in, and then you add fiscal stimulus ... the economy will actually do pretty well.”
But CNBC’s Jim Cramer thinks some on Wall Street have become too optimistic about the market given the recent increase in Covid-19 infections.
“I think there’s too many people who are positive,” Cramer said on “Squawk Box.” “Shouldn’t we just be thinking about what happens when all these businesses close?” he said, referencing the potential for lockdown measures being implemented to curb the outbreak.
On the data front, initial weekly jobless claims fell last week to 709,000 from 757,000 in the prior week, the Labor Department said Thursday. That market the fourth straight weekly decline for initial claims.
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