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article imageDow plunges as investors worry over surge in coronavirus cases

By Karen Graham     Jun 11, 2020 in Politics
New York - Wall Street got a healthy dose of reality Thursday. The Dow plunged more than 1,504 points, or 5.61 percent - the biggest selloff since April. Blame it on uncertainty over a spike in COVID-19 cases and a slow economic recovery.
The United States has surpassed two million confirmed coronavirus cases as experts predicted Thursday that the death toll could reach 169,890 by October 1, with a possible range of about 133,000 to 290,000 deaths. Close to 113,000 people have died from Covid-19 nationwide.
Besides the worrisome coronavirus report, at a Wednesday press conference, Federal Reserve Chairman Jerome Powell said it might take several years before millions of jobs return to people in the US economy - despite the jobs report last week showing that the economy added 2.5 million jobs in May, reports Markets Insider.
The Federal Reserve's outlook is dour, predicting the unemployment rate by the end of the year ending at 9.3 percent, well above the Fed’s estimate of the long-run rate forecast of 4.1 percent. This has a lot to do with the stock market selloff, said Kristina Hooper, Invesco chief global market strategist, according to Market Watch.
Naeem Aslam, writing for Forbes, writes: "I am skeptical of calling the current spike in coronavirus cases in the US as a second wave because the situation was never under control there and the civil unrest triggered by Trump’s tweet may have just made the existing situation worse."
And while Asiam points to other countries not having a spike in coronavirus cases after reopening, the United States has been pushed into reopening and disregarding many of the protocols put in place to control the virus.
However, it was the Federal Reserve's lack of confidence in a quick economic recovery, and a Labor Department jobs report on Thursday showing another 1.5 million Americans filed for first-time unemployment benefits last week that may have been the straw that broke the camel's back.
"Mass unemployment is going to be the primary condition that defines the economic narrative going forward," Joe Brusuelas, chief economist at RSM International, wrote in a report Thursday, reports CNN.
There is worry over a second wave of the coronavirus. But locking down the whole country could be disastrous. "The market is not prepared for a material second wave that would result in additional lockdowns," said Jeff Kleintop, chief global investment strategist at Charles Schwab.
More about DOW futures plunge, Coronavirus cases, Federal reserve, bleak jobs outlook
 
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