Wall Street Close: Dow ended 500 points lower on Powell's “worst since World War II” economic hit
|- Dow Jones Industrial Average lost 516.67 points, or 2.2%, to end at 23,247.97.
- S&P 500 index retreated 50.12 points, or 1.8%, ending at 2,820.
- The Nasdaq Composite Index ended at 8,863.17, off 139.38 points, or 1.6%.
US stock benchmarks closed sharply lower on Wednesday as investors take heed of the chairman of the Federal Reserve's warnings pertaining to the post-COVID-19 global economy. It is becoming more apparent to the street that the world is far from out of the woods, if not walking deeper into them, as it attempts to relax lockdown measures in the face of a stealthy virus still lurking in the neighbourhood.
The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,
– Powell said during a webcast discussion with the Peterson Institute for International Economics, validating the market's concerns.
Consequently, the Dow Jones Industrial Average lost 516.67 points, or 2.2%, to end at 23,247.97, while the S&P 500 index retreated 50.12 points, or 1.8%, ending at 2,820. The Nasdaq Composite Index ended at 8,863.17, off 139.38 points, or 1.6%.
Powell's comments came on the heals Dr. Anthony Fauci's comments the prior day where he warned that reopening too soon could lead to more disease outbreaks and unnecessary deaths. Also, we had the news that Rick Bright, the former head of the Federal Agency charged with overseeing the rapid production of a vaccine, will warn of the “darkest winter in modern history” if the US does not develop a coordinated approach based on science to combat COVID-19. More on that here: COVID-19: Rick Bright warns of “darkest winter in modern history”.
Meanwhile, the US dollar was firmer on Wednesday with the DXY up 0.2% into the close. "Fed’s Powell said overnight that the Fed’s view on negative rates hasn’t changed and it isn’t something the Fed is looking at. The Fed’s interactions with the business community and not-for-profit organisations suggest that the recovery will be slow to materialise, although once it does come unemployment should fall rapidly," analysts at ANZ Bank explained.
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