(Reuters) – Wall Street’s historic three-day bounce was stalled on Friday as doubts about the fate of the U.S. economy resurfaced with the number of coronavirus cases in the country skyrocketing.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson
The United States surpassed China as the nation with the most number of COVID-19 cases, putting more pressure on lawmakers to flood the country with cash to support businesses and families.
“We have still not fully understood the degree of the economic impact,” said Massud Ghaussy, senior analyst at Nasdaq IR Intelligence in New York.
“Currently, from a policymaker’s perspective, it’s a relative balance between managing the spread of the virus and opening the economy.”
The U.S. House of Representatives on Friday approved a $2.2 trillion aid package – the largest in American history – to help individuals and companies cope with an economic downturn caused by the coronavirus outbreak and provide hospitals with urgently needed medical supplies.
The bill now goes to President Donald Trump who is expected to promptly sign it into law.
The stimulus bill and unprecedented policy easing by the Federal Reserve have put the S&P 500 .SPX on course for its best week in over a decade, but it is still down about 14% in March and on pace for its worst first quarter ever.
The Dow Jones .DJI, technically establishing a bull market on Thursday, is on course for its biggest weekly gain since 1938, largely helped by a stunning four-day rally for Boeing Co (BA.N).
But with growing fears of a global recession, traders expect more wild swings in financial markets until there are signs of new virus cases peaking and sweeping restrictions placed on entire countries being lifted.
“(Stimulus) is not necessarily enough to make people say, ‘I’ve got to run out and buy stocks,’” said Rick Meckler, a partner at Cherry Lane Investments in New Jersey. “That’s going to take more time.”
Latest macroeconomic indicators are starting to offer a glimpse of the economic devastation from the crisis as the lockdown of major cities upends the lives of millions of Americans.
U.S. consumer sentiment dropped to a near 3-1/2-year low in March, according to a survey released on Friday, a day after data showed a record 3 million surge in jobless claims last week.
At 1:19 p.m. ET the Dow Jones Industrial Average .DJI was down 729.15 points, or 3.23%, at 21,823.02, the S&P 500 .SPX was down 77.13 points, or 2.93%, at 2,552.94 and the Nasdaq Composite .IXIC was down 232.35 points, or 2.98%, at 7,565.19.
Delta Airlines (DAL.N) American Airlines (AAL.O) and United Airlines (UAL.O) fell between 5.6% and 6.5% as U.S. Treasury Secretary Steve Mnuchin said the aid designated for airlines in the package was not a bailout and that taxpayers would need to be compensated.
Boeing shed 8.3% after gaining as much as 90% this week, as Mnuchin said the planemaker had no intention of participating in the package.
The banking index .SPXBK fell 4.5%, tracking U.S. Treasury yields, as investors sought safety in high-quality assets.
The energy index .SPNY was the biggest percentage loser among the 11 major S&P sectors, slipping 5.9%, following a drop in oil prices.
Declining issues outnumbered advancers more than 4-to-1 on the NYSE and 3-to-1 on the Nasdaq.
The S&P index recorded no new 52-week high and one new low, while the Nasdaq recorded six new highs and 27 new lows.
Reporting by Uday Sampath and Medha Singh in Bengaluru; Editing by Sagarika Jaisinghani, Saumyadeb Chakrabarty and Anil D’Silva