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Stocks plunge on fears of second coronavirus wave

By SCOTT REEVES in New York | China Daily Global | Updated: 2020-06-12 05:54
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FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, US, March 9, 2020. [Photo/Agencies]

US stocks plunged Thursday amid increased fear of a second wave of novel coronavirus infections.

The Dow Jones Industrial Average fell more than 1,800 points - its worst day since the pandemic began to roil the markets in March.

"You're seeing the psychology in the market get retested today," Dan Deming, managing director at KKM Financial, told CNBC. "The reality is this thing's (COVID-19) going to linger longer than probably the market had thought."

The Dow lost 1,861.82 points, or 6.90 percent, and closed Thursday at 25,128.17. The S&P 500 dropped 188.04 points, or 5.89 percent, to 3,002.10. The Nasdaq Composite fell 527.62 points, or 5.27 percent, and closed at 9,492.73.

Investors have been betting that the US will reopen its economy with few problems, boosting the market.

The S&P 500 turned positive for the year on Monday. Prior to Thursday's rout, the Dow and Nasdaq Composite had gained about 45 percent from their March lows.

Shares of major manufacturers were pummeled Thursday.

Aircraft builder Boeing fell 16.42 percent. Heavy machinery manufacturer Caterpillar lost 8.22 percent. Both companies are viewed as proxies for global industrial activity.

Major banks also took a beating. Bank of America lost 10.04 percent. JPMorgan Chase, the nation's largest bank based on deposits, fell 8.34 percent. Citigroup lost 13.37 percent.

After a strong run up by airline stocks, traders dumped shares of American Airlines, Delta and United. All lost at least 14 percent.

Cruise lines also took a hit. Carnival and Norwegian Cruise Line lost at least 15 percent each.

Retail continued its skid as Macy's, Gap and Kohl's traded lower.

Statistics compiled by Johns Hopkins University show US coronavirus infections now exceed 2 million, with about 111,000 deaths.

Coronavirus cases and hospitalizations are spiking in Arizona. Texas reported three consecutive days of record-high coronavirus hospitalizations, and nine counties in California reported an increase of confirmed cases or hospitalizations.

It's unclear if the new cases reflect a premature reopening of the economy in those states, a disregard for social distancing and mask-wearing, or if it's the fallout from recent demonstrations and riots to protest the death of George Floyd, an unarmed black man, at the hands of a white Minneapolis police officer. Many protesters didn't wear masks or observe social distancing guidelines.

Following Wednesday's Federal Reserve meeting, Board Chairman Jerome Powell said that the labor market may not recover for years and that millions of workers may be unable to return to their old jobs or industries. Powell pledged to continue support for the economy by buying bonds and keeping interest rates low.

The number of new jobless claims continued to decline, suggesting the worst of the coronavirus-related layoffs are probably over.

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