Wall Street Close: Investors start to doubt the economic recovery playbook
|- The S&P 500 dropped 34.40 points to 3,145.32.
- The Dow Jones Industrial Average fell 396.85 points, or 1.5%, to 25,890.18.
- The Nasdaq, index came off an all-time high, losing 89.76 points, or 0.9%, to 10,343.89.
Wall Street has buckled mid-week following a long weekend and mounting bad news with respect to the spread of the coronavirus.
US confirmed cases are nearing 3 million while Brazil now has 1.6m cases including the president of Brazil Jair Bolsonaro.
US stocks ended broadly lower following a pullback in European markets.
Germany's DAX lost 0.9%, while France's CAC 40 fell 0.7%. The FTSE 100 in London dropped 1.5%. Markets in Asia also fell.
Consequently, the S&P 500 lost 1.1% after spending most of the day in the red with investor taking profits from a log or its longest streak of gains this year. The S&P 500 dropped 34.40 points to 3,145.32.
The Dow Jones Industrial Average fell 396.85 points, or 1.5%, to 25,890.18.
The Nasdaq, index came off an all-time high, losing 89.76 points, or 0.9%, to 10,343.89.
Is the optimism overdone?
We have seen a rally that has defied all of the odds in the face of the coronavirus and asset price bubbles left right and centre.
We have seen unprecedented amounts of aid from governments and central banks and the word on the street that the banks were far better equipped this time around to sustain the shock and downtrun of the financial market compared to the GFC.
The economic data coming out over these COVID ridden months has beaten the most optimistic of expectations while record numbers of broking accounts have been opened.
However, the question everyone is asking now is whether the euphoria-driven rally could be coming to a head?
The pandemic is worsening and lockdown could be back on the agenda.
What the markets could now be fainting, unlike the GFC's liquidity crisis, is an insolvency crisis as business stop spending and people start hoarding.
Renowned former Goldman Sachs fund manager Raoul Pal has warned the coronavirus will cause history's worst insolvency event, while moving 25% of his portfolio to bitcoin.
"I think it's a huge societal change that's coming from all of this," Pal said, adding that he thinks the coronavirus crisis will cause "the largest insolvency event in all history."
More US jobs
The US JOLTS data shows job openings lifted to 5.397m in May from 4.996 in April, "which is encouraging", according to analysts at ANZ Bank, "but that’s still 1.6m less jobs on offer than prior to COVID-19."
DJIA levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.