Wall Street took a nosedive Thursday as investors ran from risk after the Federal Reserve’s economic warnings and the threat of a second wave of coronavirus infections, plus more in today’s Closing Bell on Money & Markets.
The Top Story
The U.S. stock market’s recent rally executed a sharp reversal Thursday after the Federal Reserve warned of the lasting impact the coronavirus will have on the economy as it tries to open back up. It was the worst day for stocks since March.
Investors are also worried about a second wave of COVID-19 as new cases rose slightly in the U.S. after five weeks of declines. Reuters analysis showed this was only partly due to increased testing as well.
Economic data appeared to back up the Fed’s dour economic projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million (see below).
All 11 major sectors of the S&P 500 were in the red, with energy and financials suffering the largest percentage drops.
Interest rate-sensitive banks slipped 8.3% after the Fed indicated key interest rates would remain near zero through at least 2022.
The VIX volatility index, a barometer of investor anxiety, hit its highest level since May 14.
The Dow Jones crashed down 6.9%. The S&P 500 lost 5.9 and the Nasdaq dropped 5.3%. The Russell 2000 fell by 7.3%.
Stock Market Update: Closing Bell*
S&P 500: 3,002 (-5.89%)
DOW: 25,128 (-6.90%)
NASDAQ: 9,492 (-5.27%)
RUSSELL 2000: 1,359 (-7.38%)
VIX: 40.69 (+47.33%)
GOLD: $1,734.30 (+0.79%)
BITCOIN: $9,229.02 (-6.80%)
U.S. 10-YEAR YIELD: 0.669% (-0.079)
*- as of 4:15 p.m.
A Big Win
We mentioned Walt Disney Co. (NYSE: DIS) in the Opening Bell this morning, and it was not safe from the sell-off as investors mulled its plans to reopen Disneyland in July. Shares fell 7.8%.
GrubHub Inc. (NYSE: GRUB) was one of the rare winners Thursday after news broke of its planned merger with European-based Just Eat Takeaway. GrubHub’s stock rose 4.6%.
Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) was trading in the green during the morning after reporting it had started human trials of its COVID-19 vaccine. Shares sank into the red later, though, and closed 1.7% lower.
Golden Nuggets
Gold prices eased as the U.S. dollar firmed, however, fears of a new wave of coronavirus infections and low interest rates kept bullion close to its one-week high.
Spot gold moved down 0.7% to $1,727.30 per ounce after hitting its highest since June 2 at $1,744.36.
The dollar rose versus major currencies, benefiting from safe-haven flows as Wall Street slumped on reports of a rise in virus cases as most U.S. states reopen.
Gold futures jumped 0.8% to $1,734.80 per ounce. Silver futures moved 0.3% lower to trade at $17.75 an ounce.
Platinum fell 2.9% to $821.30 an ounce while palladium dropped 0.2% to trade at $1,927.60 an ounce.
Cannabis Corner
Ohio regulators have recommended adding wasting syndrome, or cachexia, to the list of conditions that qualify for medical cannabis, according to Marijuana Business Daily.
The board did, however, reject adding autism and anxiety.
Cachexia is a disease that causes severe weight loss and can be associated with various chronic conditions.
The decision is expected to be finalized in July.
Jobless Claims Fall Again but Worry Lingers
Another 1.54 million people applied for unemployment last week, according to the Labor Department.
While it was the 10th straight week of declines for new claims, there are still 20.92 million continuing claims open, and now there is growing worry it could take years for the labor market to recover.
“The economy won’t be fully recovered until the labor markets say everyone has got their jobs and paychecks back to help the country spend its way to sustainable prosperity,” said Chris Rupkey, chief economist at MUFG in New York, in a Reuters interview.
Today’s Big Winners
S&P 500: Zoom Video Communications Inc. (NYSE: ZM) +0.5%
Nasdaq: Zoom Video Communications Inc. (NYSE: ZM) +0.5%
Dow: N/A
Today’s Big Losers
S&P 500: ONEOK Inc. (NYSE: OKE) -15.8%
Nasdaq: United Airlines Holdings Inc. (Nasdaq: UAL) -16.1%
Dow: Boeing Co. (NYSE: BA) -16.4%
Check back for the most important news and numbers each day after the Closing Bell, only on Money & Markets.