US stocks tumble as coronavirus fears intensify
US stocks have fallen after US President Donald Trump’s advisers warned hundreds of thousands of Americans could die from coronavirus and gloominess about the economy spread among investors.
The Dow Jones industrial average slid 2.6 per cent in early trading, the S&P 500 dropped 2.8 per cent and the Nasdaq fell 2.1 per cent.
The falls come the day after Wall Street’s worst quarter since 1987, when stock markets crashed on Black Monday.
White House coronavirus coordinator Deborah Birx yesterday said hundreds of thousands would die even if Americans followed strict coronavirus restrictions.
US officials think as many as 240,000 Americans could lose their lives. Trump said the next two weeks would be “very, very painful”.
European stocks also tumbled today as risk-off sentiment took hold of investors. The pan-European Stoxx 600 fell 2.4 per cent, the FTSE 100 slid three per cent, and the German Dax dropped 3.4 per cent.
More than 851,000 people have been confirmed infected across the world and over 42,000 have died.
Fears grow over the US economy
The US is now at the centre of the outbreak in terms of cases, with more than 187,000 confirmed infections. The virus has claimed 3,883 lives in the US so far.
The spread of the virus has triggered a bad start to the second quarter for US stocks, which rallied last week after the US Federal Reserve and Congress unveiled huge stimulus measures.
Nonetheless, the rally could not prevent US stocks suffering their worst quarter since 1987 in the first three months of the year. The Dow and S&P each fell more than 20 per cent – deep into so-called bear territory.
Oliver Brennan, senior macro strategist at consultancy TS Lombard, said: “The prerequisites for market consolidation are not in place, let alone for market strength.”
“The precursor to any sustainable market rally in the current environment must be positive news on the pandemic – declining infection rates and/or other signs of its spread being controlled.”
In a sign of the effect that containment measures are having on the economy, survey data showed that new orders to US factories fell at the fastest rate since 2009 in March.
Workers in the manufacturing sector, which contracted, were also laid off at the fastest rate in 11 years, the Institute of Supply Management said.
Last week, data showed that 3.3m Americans made a claim for unemployment benefit in the week to 21 March. This was by far the biggest jobless claims reading in history.
“We expect another record print in jobless claims on Thursday, rising from 3.28m to 4.45m for the week ending 28 March,” said Morgan Stanley economist Jan Kozak.