Stocks fell considerably Wednesday, in what looks to be a totally risk-off day in financial markets. Ominous coronavirus estimates and poor economic data are beginning to make Wall Street nervous again.
All three major U.S. indices fell considerably Wednesday, with the S&P 500 and Dow Jones Industrial Averages down as much as 3.5% and 3.6%, respectively.
The 10 year treasury yield fell to 0.61% from 0.68% Tuesday. Not only is the Federal Reserve supporting the treasury market, but the magnitude of the move shows investors may be moving into the bond for safety.
JPMorgan (JPM) - Get Report and Goldman Sachs (GS) - Get Report shares were outpacing the Dow’s losses. Those stocks were down 5.05% and 4.4%, respectively, on the threat of both lower loan volumes in poor economic times and slimmer net interest margins on the back of lower long-term yields.
The White House predicts 100,000-240,000 people will die from coronavirus in the U.S. in 2020. Given the death rate of around 1% to 2%, it is clear that a significant portion of the 330 million person U.S. population will contact the virus, furthering the need for the economically devastating social distancing policy.
Wall Street is beginning to worry that the economy could be in recession indefinitely
"The global economy is likely to be headed for recovery from a coronavirus-triggered downturn within six months – but only if mass testing is rolled out now and governments guarantee to support demand,” said Nigel Green, CEO and Founder of DeVere Group, a wealth manager.
“Certainly, this [virus] is going to cause some permanent damage — the question is how much?” Brian Rose, senior economist at UBS told TheStreet. "To some degree, that’s about the spread of the Virus and the lockdown. As long as we have these measures in place, the more permanent damage you’ll see in terms of the economy.”
March payrolls were down 27,000 year-over-year, according to ADP. Friday, the Bureau of Labor Statistics will report its number, which can vary considerably from ADP’s.
"This week’s payroll data will not capture the full extent of the layoffs caused by the pandemic,” said James McCann, senior global economist at Aberdeen Standard Investments. "Sadly we’re only at the start of this process.”