Wednesday, 13 May 2020

Stocks Slide on Powell Remarks, U.S.-China Worries: Markets Wrap

By Rita Nazareth, Vildana Hajric and Katherine Greifeld

 U.S. stocks slumped to a three-week low after Jerome Powell warned economic risks from the virus are significant and tensions with China flared. Treasuries and the dollar advanced.

The S&P 500 briefly fell below 2,800 -- a level that has provided support in the past month -- after the Federal Reserve chairman said the threat of a lasting downturn can deepen without additional government spending. Equities extended losses after a federal savings plan delayed moving funds into an index with Chinese stocks, adding to tensions stoked by President Donald Trump. U.S. airlines plummeted after a warning that demand for flights will lag behind pre-coronavirus forecasts for at least 2025.

The stock weakness has the S&P 500 headed for its worst week since March 20, the session before a furious 30% rally started. Equities tumbled Tuesday after health official Anthony Fauci warned the pandemic could worsen if states open too soon, and some Fed chiefs expressed concern the recession will be long. Famed investor Stanley Druckenmiller said equities are too high, while David Tepper called the stock market the most overvalued ever outside of the 1999 bubble. 

 “It continues the theme from yesterday that the recovery will be slower and more uneven than what markets may currently be discounting,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “With the nice run off the lows, it makes sense to take some profits.”

Read the Whole Story on  Bloomberg

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