Stocks tumbled Wednesday as indexes set their worst start to a quarter on record. Deaths and illness from the coronavirus pandemic will cause a “very, very painful two weeks,” according to President Donald Trump.
Stocks tumbled Wednesday as indexes set their worst start to a quarter on record. Deaths and illness from the coronavirus pandemic will cause a “very, very painful two weeks,” according to President Donald Trump.
Stocks tumbled Wednesday. The Dow Jones Industrial Average and S&P 500 both posted their worst starts to a quarter ever. The Dow lost 973.65 points, or 4.44%, to close at 20,943.51. The S&P 500 fell 114.09 points, or 4.41%, to end at 2470.50, and the Nasdaq Composite fell 339.52 points, or 4.41%, to close at 7360.58.
Investors started the new quarter with a dismal outlook. President Donald Trump warned of a “very, very painful two weeks” on Tuesday as the White House projected 100,000 to 240,000 deaths in the U.S. from the coronavirus pandemic, even amid current social-distancing guidelines. There is no sign of peaking in new cases in the near term.
American manufacturing activity slipped in March, not surprisingly, as the coronavirus disruptions hit the sector, which was already shaky before the crisis. The Institute for Supply Management said its manufacturing index fell to 49.1 in March from 50.1 in February. The below-50 reading represents economic contraction, but the decline wasn’t as bad as economists had feared. Economists surveyed by The Wall Street Journal had expected a reading of 44.5 for March.
Private payroll company ADP said earlier Wednesday that firms have cut 27,000 jobs in March. While the number marks the first time since 2017 that employers eliminated more workers than they hired, it was better than what economists had expected. But investors should get no comfort.
The March reading has vastly understated the current scale of job losses because the survey’s cutoff date was on March 12—before the latest wave of layoffs and furloughs that started to build up later in the month. For the same reason, the Labor Department’s official jobs data for March—with the same cutoff date and due out on Friday—won’t be able to reflect the depth of the labor-market crash as well.
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It’s clear that the worst is yet to come. Some economists estimate more than 20 million jobs could be lost in the coming weeks, and jobless claims will extend last week’s record 3.3 million. But investors will have to wait until the April and May jobs reports to see the actual extent of the damage.
Oil prices continued to drop, as Saudi Arabia raised its production above 12 million barrels a day on Wednesday, following through on threats it made in recent weeks amid a price war with Russia. The boosted production—about two million barrels a day more than a month ago—has worsened the oversupply of crude in a market that is already suffering from plummeting demand due to the coronavirus-caused economic disruption.
Also, members of the Organization of the Petroleum Exporting Countries have failed to agree on whether to meet this month for an emergency discussion about the recent volatility in the oil market, signaling a widening rift between members. Supply cuts in the near future may be less likely. Brent futures, the global crude-oil benchmark, lost 6.11% on Wednesday to close at $24.74 per barrel. Oil prices have just ended their worst quarter on record, with Brent declining more than 60% from the start of the year.
Write to Evie Liu at evie.liu@barrons.com
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