Dow plunges nearly 7% on COVID-19 fears, Economic forecasts

The Dow Jones Industrial Average plummeted more than 1,860 points, or 6.9%, on Thursday as investors seemed concerned about new spikes in COVID-19 cases and on the heels of two gloomy economic forecasts.

Meanwhile, the S&P 500 closed down 5.9% and the NASDAQ tumbled 5.3%.

Thursday marked the worst day for U.S. financial markets since March 16, when the impact of the Corona-virus pandemic first began to hit Wall Street.

As pandemic restrictions have eased and some states begin to reopen, many states are reporting rising Corona virus cases — data that appears to have some investors jittery.

“Today the market woke up to news that should have been apparent to anyone who lives outside the New York tri-state area: People in the rest of the country are out and about, largely not wearing masks and not keeping 6 feet apart,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said in a commentary about Thursday’s sell-off.

“Not surprisingly, a lack of preventative behavior has led to a resurgence in Covid-19 cases around the country and the stock market is having another gut check,” he added. “The economy is going through a demand shock that is likely to last a year or more and won’t bounce back to full strength until a cure or vaccine is widely available,” he added.

The worst performer for the Dow on Thursday was Boeing, which plunged more than 16%, followed by Dow Inc., IBM and Goldman Sachs, which each fell more than 9%.

Oil giants Exxon Mobil and Chevron also took a hit, each falling more than 8%.

Two leading economic organizations released pessimistic forecasts about the road to recovery on Wednesday.

The Organization for Economic Co-operation and Development warned in a dire forecast that U.S. gross domestic product expected to fall by 8.5% in 2020 if a second wave hits and by 7.3% even without a second wave.

Also Wednesday, the Federal Reserve projected the U.S. unemployment rate to remain elevated in the near future, at 9.3% through 2020, 6.5% in 2021 and 5.5% in 2022.

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