Stocks plunged Wednesday as fresh concerns about the coronavirus’s economic toll dampened optimism on Wall Street.
The Dow Jones industrial average tumbled as much as 716.44 points, or nearly 3 percent, giving back the prior day’s 2.7 percent jump on hopes that virus-battered economies could reopen before too long. The S&P 500 also slid as much as 2.9 percent by midday, while the tech-heavy Nasdaq Composite fell 2.4 percent.
The drop followed a slew of bad news about the pandemic’s impact on the economy, including a record-setting plunge in US retail sales for March and the International Monetary Fund’s Tuesday warning that the world is in for its deepest recession since the Great Depression — which it dubbed the “Great Lockdown.”
“Although the stock market is pricing a rapid V-shaped economic recovery, we believe this is misguided as we have yet to see the full extent of economic deterioration,” said Andrew Smith, chief investment officer of Delos Capital Advisors. “While it is always more exciting to be the life of the bull party, we prefer to be fashionably late than painfully early.”
Wall Street also wrestled with more rough first-quarter results from major banks at the start of the corporate earnings season. Bank of America, Citigroup and Goldman Sachs said they put billions of dollars aside to cover potential loan losses as the pandemic slams businesses across the globe. JPMorgan Chase and Wells Fargo announced similar moves Tuesday.
Investors took those moves as another sign of how deeply the virus crisis will gut the economy even as banks posted sizable profits for their investment banking businesses, according to Anthony Denier, CEO of the trading platform Webull.
“When you have the largest financial institutions in the world that basically see every industry, they have their hand in every part of this global economy and they’re saying, ‘Hey, we’re gonna take these huge loan loss provisions’ — maybe they know something,” Denier told The Post. “Maybe they know that this is gonna be longer and worse than I expect.”
Wednesday’s dip marked a retreat from last week’s rally in stocks following a brutal downturn in March as the virus crisis roiled global markets. The Dow started Wednesday nearly 30 percent above its low reached about three weeks ago, but still about 20 percent below the all-time intraday peak hit in February.
“Stocks have enjoyed a decent rebound over the last month so perhaps we’re seeing a little risk now being taken off the table as the economic reality of the situation starts to hit home,” OANDA senior currency analyst Craig Erlam said in a commentary.
The tumble on Wall Street came alongside another drop in oil prices after the International Energy Agency warned that demand for oil will plummet by a record 9.3 million barrels a day this year amid the pandemic. That would erase nearly a decade of growth even as Saudi Arabia, Russia and other oil producers have pledged to cut output, according to the agency.
West Texas Intermediate crude futures were down 0.6 percent at $19.99 a barrel as of 12:57 p.m. after falling earlier to $19.20, their lowest price since early 2002.
With Post wires