US stocks have fallen sharply as hopes of a quick post-virus economic recovery start to fade.
The Dow Jones Industrial Average lost more than 1,800 points (6.9%) in Thursday trading – its worst day since the middle of March, when much of the western world began lockdown restrictions to limit the spread of the virus.
The S&P 500 dropped by 5.9%, its biggest fall since 16 March, and the tech-rich Nasdaq lost almost 5.3%, down by more than 500 points just a day after rising above 10,000 for the first time.
Many analysts had worried that the optimism seen in US markets during recent weeks was not an accurate picture of the challenges facing the economy as it begins to recover from the pandemic.
The S&P 500, for example, had risen by 44.5% between late March and Monday.
But Thursday’s trading hit almost all of the index’s companies: technology, financial, industrial and health care stocks all saw falls.
Energy prices were also down, with crude oil prices falling amid concern from investors that a struggling economy will result in a lack of demand.
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It also comes after the US Federal Reserve warned on Wednesday that the country’s economic recovery would be long and rates would be kept low for a while yet.
Sal Bruno, chief investment officer at IndexIQ, said: “It’s not surprising to see a bit of a sell-off, given the furious rally we’ve had coming out of the lows, despite the fact that the economy was not doing great.
“The fact that (the Fed) is talking about keeping interest rates this low through 2022 is a little eye-opening for a lot of folks.”
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Meanwhile, it is thought that a rise in the number of coronavirus cases in the US could be connected with the reopening of businesses and easing of stay-at-home rules.
According to analysis by the Associated Press, the number of cases is rising in nearly half of US states, something that could worsen as summer holidays get under way.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said: “Not surprisingly, a lack of preventative behaviour has led to a resurgence in COVID-19 cases around the country and the stock market is having another gut check.”
Earlier, the FTSE 100 was down just under 4% and European and Asian markets also fell.
Source : Sky News