Worries About Coronavirus Death Toll Lead To Sell-Off On Wall Street

Stocks moved sharply lower over the course of the trading day on Wednesday, extending the pullback seen in the previous session. With the drop on the day, the Dow and the S&P 500 saw further downside after turning in their worst first quarter performances ever.

The major averages climbed off their worst levels going into the close but still posted steep losses. The Dow plummeted 973.65 points or 4.4 percent to 20,943.51, the Nasdaq tumbled 339.52 points or 4.4 percent to 7,360.58 and the S&P 500 plunged 114.06 points or 4.4 percent to 2,470.50.

The sell-off on Wall Street came amid renewed coronavirus concerns after White House officials warned of nearly a quarter million deaths from the pandemic.

During a White House press conference on Tuesday, President Donald Trump warned the U.S. is facing a “very, very painful two weeks.”

White House officials are now projecting between 100,000 and 240,000 deaths in the U.S. as a result of the outbreak, which Trump previously sought to downplay.

“This could be a hell of a bad two weeks. This is going to be a very bad two, and maybe three weeks. This is going to be three weeks like we’ve never seen before,” Trump said.

The comments from the White House come as data from Johns Hopkins University shows there are more than 200,000 confirmed coronavirus cases in the U.S. and more than 4,500 deaths.

On the U.S. economic front, payroll processor ADP released a report showing a modest decrease in private sector employment in the U.S. in March, although the data does not reflect the full impact of the coronavirus-induced shutdown.

ADP said private sector employment fell by 27,000 jobs in March after jumping by a downwardly revised 179,000 jobs in February.

Economists had expected private sector employment to plunge by 150,000 jobs compared to the addition of 183,000 jobs originally reported for the previous month.

The drop was much smaller than expected but still reflects the first decrease in private sector employment since September of 2017.

ADP also noted its national employment report, or NER, only utilizes data through the 12th of the month, which is the same period the Labor Department uses for its more closely watched monthly jobs report.

“As such, the March NER does not fully reflect the most recent impact of COVID-19 on the employment situation, including unemployment claims reported on March 26, 2020,” said Ahu Yildirmaz, co-head of the ADP Research Institute.

A separate report from the Institute for Supply Management showed a relatively modest contraction in U.S. manufacturing activity in the month of March.

The ISM said its purchasing managers index dipped to 49.1 in March after edging down to 50.1 in February. While a reading below 50 indicates a contraction in manufacturing activity, economists had expected the index to show a steeper drop to 45.0.

Sector News

Banking stocks moved sharply lower over the course of the trading session, dragging the KBW Bank Index down by 6.9 percent.

Substantial weakness was also visible among commercial real estate stocks, as reflected by the 6.7 percent nosedive by the Dow Jones U.S. Real Estate Index.

Utilities, chemical, oil service and housing stocks also saw considerable weakness, moving sharply lower along with most of the other major sectors.

Meanwhile, gold stocks were among the few groups to buck the downtrend, with the NYSE Arca Gold Bugs Index spiking by 3.1 percent despite a drop by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index plummeted by 4.5 percent, while Hong Kong’s Hang Seng Index tumbled by 2.2 percent.

The major European markets also showed significant moves to the downside on the day. While the French CAC 40 Index plunged by 4.3 percent, the German DAX Index and the U.K.’s FTSE 100 Index tanked by 3.9 percent and 3.8 percent, respectively.

In the bond market, treasuries are rebounding following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 10.1 basis points at 0.597 percent.

Looking Ahead

The Labor Department will provide a more updated look at the employment situation with the release of its report on weekly jobless claims on Thursday.

The jobless claims report is likely to overshadow separate reports on the U.S. trade deficit and factory orders in the month of February.

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