Despite gains made earlier this week due to encouraging unemployment numbers, Wall Street suffered major losses throughout Thursday, marking the stock market’s worst day in nearly three months.
According to Politico, the S&P 500 fell by 5.9 percent, while the Dow Jones Industrial Average lost over 1,800 points for a drop of 6.9 percent. The Nasdaq fared slightly better, though it still suffered a fall of 5.3 percent.
The stock market losses bring an end to the dramatic growth witnessed on Wall Street over the past few weeks, buoyed by the belief that the economy would quickly bounce back after suffering coronavirus-related lockdown measures.
Experts have claimed the threat of a second wave of the coronavirus has many investors balking. Charlie Ripley, senior investment strategist for Allianz Investment Management, specifically claimed that analysts are waiting to see more data on COVID-19 before making more investments.
“We think the recovery is largely underway, but there is still some considerable uncertainty on the path we have ahead,” Ripley said.
“If we see some more follow-on of people coming back to work and consumer sentiment picking up, that will be a positive sign for a faster recovery,” he added.
In addition to the threat of more coronavirus woes, the chairman of the Federal Reserve issued a dire warning that economic repercussions of the COVID-19 crisis would be felt for a very long time and could even potentially be permanent. The gloomy statement quickly earned the ire of President Donald Trump, as was previously reported by The Inquisitr.
As a result of the pessimism, gold and precious metal funds saw gains as investors looked to shift their money into low-risk options. Bond yields fell as well, another sign that investors are looking for stability.
In contrast, almost every single company in the S&P index was down, with energy stocks taking the largest hit in response to falling crude oil prices. Technology, financial, and even healthcare stocks also saw losses, despite optimistic reports about a potential COVID-19 vaccine on the horizon.
Sal Bruno, chief investment officer at IndexIQ, said that it was “not surprising” to see the sudden sell-off.
“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,” he explained.
“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,” Bruno added.
The news of stock market losses will likely only continue to feed the growing concerns of an economic crisis due to the COVID-19 pandemic. For example, USA Today claimed that a credit crisis is on the horizon for many Americans. On a global scale, Argentina defaulted last month for the ninth time, marking it as the first nation potentially facing financial collapse due to the virus.