Dow closes down 1,800 points as U.S. virus cases hit 2 million, deflating optimism
NEW YORK, NY -- The stocks mega-rally hit a roadblock on Thursday.
The Dow Jones Industrial Average plummeted more than 1,860 points, or 6.9%, as investors seemed concerned about new spikes in Covid-19 cases on the heels of a gloomy economic forecast.
Meanwhile, the S&P 500 closed down 5.9% and the Nasdaq tumbled 5.3%.
Thursday marked the worst day for U.S. financial markets since March 16, when the impact of the coronavirus pandemic first began to hit Wall Street.
A somber economic outlook from the Federal Reserve and the two millionth coronavirus case in the U.S. had investors questioning whether they had boosted the stock market too far, too fast.
As pandemic restrictions have eased and some states begin to reopen, many states are reporting rising coronavirus cases -- data that appears to have unnerved Wall Street and made investors jittery.
"Today the market woke up to news that should have been apparent to anyone who lives outside the New York tri-state area: People in the rest of the country are out and about, largely not wearing masks and not keeping six feet apart," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a commentary about Thursday's sell-off.
"Not surprisingly, a lack of preventative behavior has led to a resurgence in Covid-19 cases around the country and the stock market is having another gut check," he added.
Analysts noted a second wave of infections could force many businesses to close again just after they reopened.
But Treasury Secretary Steven Mnuchin said the U.S. economy wouldn't be shut down again despite the rising case count.
"We can't shut down the economy again. I think we've learned that if you shut down the economy, you're going to create more damage, and not just economic damage, but there are other areas," he told CNBC in an interview.
The Federal Reserve is projecting the unemployment rate to remain elevated in the near future, at 9.3% through 2020, 6.5% in 2021 and 5.5% in 2022.
"The economy is going through a demand shock that is likely to last a year or more and won't bounce back to full strength until a virus cure or vaccine is widely available," Zaccarelli indicated.
