It was the fastest rally seen in over nine decades, according to Bloomberg. But after going full speed ahead for three days, fatigue set in as the long-term outlook for the COVID-19 pandemic set in. Treasuries made some gains while oil plunged.
At the opening bell, the Dow Jones Industrial Average dropped 655 points or 2.9 percent The S&P 500 slid 2.5 percent along with the Nasdaq Composite. Analysts blame surging unemployment and coronavirus cases in the U.S., even as the House of Representatives passed the $2 Trillion stimulus package this morning, sending it to President Donald Trump to be signed.
“Bear market ‘head-fake’ rallies are not uncommon,” Maneesh Deshpande of Barclay’s tells CNBC. Big uncertainties such as how long quarantines will have to last amid the coronavirus outbreak continue to weigh on investors, he added. The bear runs that began in 2000 and 2007 both had head fakes of more than 20 percent before ending, Barclays data shows.
It was revealed on Thursday that unemployment claims spiked to almost 3.3 million last week, dwarfing the previous record of 700,000 set in 1982. Market commentators are not real optimistic. “The situation is about to get worse in the coming weeks,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, warned in a morning email, citing the surges in US unemployment and coronavirus cases, according to Markets Insider.
“If recovery is not as swift as hoped for, equity markets will suffer another hit,” Neil Wilson, chief market analyst for Markets.com, said in a morning note.
In other news, Oil prices tumbled, with West Texas Intermediate down 3.5 percent at 21.80 a barrel, and Brent crude down 4 percent at about $25.30. European equities dropped, with Germany’s DAX down 3.9 percent, Britain’s FTSE 100 down 5.6 percent, and the Euro Stoxx 50 down 4.4 percent.
