The Dow is approaching 600 points as the economic outlook becomes increasingly dangerous

The Dow is approaching 600 points as the economic outlook becomes increasingly dangerous

The grand opening of the economy is already stalled. Texas Gov. Greg Abbott on Friday ordered further restrictions for local businesses, a day after the reopening was “paused” to curb the rise of new infections.
Dow (indu) fell 600 points, or 2.3%, in the early afternoon. S&P 500 (SPX) – the widest measure of Wall Street – 1.9% was traded at noon, and Nasdaq Composite (COMP) it also fell 1.9%.

Although U.S. financial institutions have received health care from the central bank, they will need to raise additional capital to protect themselves from losses and preserve the ability to lend for work in the country.

Banks will also not be allowed to repurchase shares in the third quarter, and shareholder dividends will be limited.

Banks performed best in the market on Thursday after repealing key banking regulations.

But economic data again pointed to some worrying areas on the U.S. long road to recovery on Friday.

The Bureau of Economic Analysis reported that consumer spending recovered in May, but Americans ’incomes plummeted as government payments fell. This is bad for the U.S. consumption-dependent economy: if people don’t have the money to spend, recovery from a pandemic recession will take longer.

Meanwhile, the University of Michigan reported that consumer sentiment declined in the second half of June, in step with a resurgence in Covid-19 cases in parts of the country.

So far, the stock market has proven resilient to rising new infection rates in states like Texas and Florida. This is partly related to the Fed’s commitment to loosen its monetary policy.

READ  Indian wedding: the groom dies two days later and 80 people are infected with the coronavirus

A large post-closure rally that sent stocks more as the economy began to reopen may have been fully boosted by a central bank stimulus, suggested Fawad Razaqzada, a market analyst at ThinkMarkets, so reselling for fear of the virus could result in an even deeper decline.

Leave a Reply

Your email address will not be published. Required fields are marked *