Stocks Skid Worldwide As Coronavirus Infections Keep Soaring
NEW YORK - 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 was down nearly 5% in afternoon trading as investors remain uncertain about the duration of the virus outbreak and its ultimate impact on the global and domestic economies.
In the U.S., President Donald Trump warned Americans to brace for "one of 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. The governor of Florida issued a statewide stay-at-home order.
Japanese stocks took some of the world's heaviest losses, down 4.5%, after a survey of business sentiment there fell to its worst result in seven years. Britain's FTSE 100 fell 3.8% after big banks there scrapped dividend payments, part of a worldwide effort by companies and households alike to conserve cash.
Stocks have tumbled this year as the coronavirus pandemic forces economies into what is expected to be a steep, sudden recession. Businesses are shutting down, people are staying at home in hopes of slowing the spread of the virus and the S&P 500 just closed out its worst quarter since 2008 with a 20% loss.
"The challenge for investors is you don't know how deep and how wide this downturn may be," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "It ends up being a true leap of faith that the forecast and the duration of the pandemic will be accurate."
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.
Even Friday's more comprehensive jobs report from the government may not show the full scale of the layoffs sweeping the country, according to Rhea Thomas, senior economist at Wilmington Trust. Small businesses are seeing the sharpest declines in employment, and some closed firms may not be responding to the survey.
The government's weekly jobless claims report may offer a better view. The next batch of numbers comes today, and Thomas said it could blow past last week's total of 3.3 million initial claims, which itself was quintuple the prior record.
Another report on Wednesday showed that U.S. manufacturing activity contracted in March, reversing after two months of slight growth. The reading, though, was not as bad as economists expected.
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.
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, and 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.
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