Wall Street plunged on Thursday as market participants remained concern about the second wave of coronavirus infections. Moreover, Fed’s somber outlook regarding the U.S. economy significantly dented investors’ confidence. All three major stock indexes recorded their worst single-day performance since Mar 16.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) nosedived 6.9% or 1,861.82 points to close at 25,128.17. Notably, all 30 components of the blue-chip index ended in the red. Percentagewise, this was the fourth largest single-day decline of the 30-stock index in 2020 so far. Meanwhile, the tech-heavy Nasdaq Composite finished at 9,492.73, shedding 5.3% or 527.62 points due to weak performance of large-cap tech stocks. It was the lowest closing of the tech-laden index since May 29.
The S&P 500 plummeted 5.9% or 188.04 points to end at 3,002.10. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Materials Select Sector SPDR (XLB) tanked 9.4%, 8.2% and 7.7%, respectively. Notably, all eleven sectors of the benchmark index closed in negative territory. This was first three-day losing streak of the broad-market index since early March.
Shares of oil behemoths Exxon Mobil Corp. (XOM – Free Report) and Chevron Corp. (CVX – Free Report) plunged 8.8% and 8.4%, respectively. Both stocks carry a Zacks Rank #3 (Rank). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) jumped 48% to 40.79, marking its first close above 40 since May 4. A total of 15.31 billion shares were traded on Thursday, higher than the last 20-session average of 12.83 billion. Decliners outnumbered advancers on the NYSE by a 17.60-to-1 ratio. On Nasdaq, a 12.98-to-1 ratio favored declining issues.
Concern Over Resurgence of Coronavirus Cases
Investors remain highly concern about the second wave of coronavirus cases which will significantly delay the just started reopening process of the economy. The seven-day average of new cases over the past two weeks is still rising in more than 20 states. Texas witnessed record-breaking COVID-19 cases in the last three days. Nine California counties have reported a spike in new coronavirus cases. So far 2 million people have infected and more than 112,000 died in COVID-19 in the United States.
Fed Projects a Gloomy Outlook
On Jun 9, after its two-day FOMC meeting, the Fed projected the U.S. GDP to decline by 6.5% in 2020 before recovering at 5% in 2021. Unemployment rate will stay at 9.3% by this year end. The central bank has desired to maintain 0% interest rate and asset buyback programs till 2022 and expects to maintain this target ” until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
U.S. Economy in Recession
On Jun 8, the National Bureau of Economic Research (NBER) stated that the U.S. economy has fallen in recession since mid-February, ending the historically longest 128 months of expansions. Moreover, the World Bank, the IMF and OECD forecasted that the global economy will shrink 5.2%, 3% and 6%, respectively, in 2020 due to the coronavirus-induced devastations.
The Department of Labor reported that first time jobless claims filed by Americans declined to 1.542 million for the week ended Jun 6 from a revised 1.897 million from the previous week. The consensus estimate was 1.556 million. Initial claims declined for 10th consecutive weeks from its peak recorded in the last week of March. Continuing claims, counting the people who have applied for unemployment benefits for at least two weeks in a row, declined to 20.9 million, compared with 21.3 million in the previous week.
The Department of Commerce reported that the producer price index (PPI) rose 0.4% in May compared with a decline of 1.3% in April. Consensus estimate was for an unchanged PPI. The core PPI (excluding volatile food and energy components) remained unchanged compared with a decline of 0.4% in April. The consensus estimate was for a decline of 0.1%.
Stocks That Made Headline
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Infosys (INFY – Free Report) yesterday unveiled its enterprise-grade “Return to Workplace” solutions to help clients offer safe workplaces to employees amid the COVID-19 pandemic. (Read More)
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