US: Dow ends ugly session 2.1% lower on growth, valuation worries

[NEW YORK] Wall Street stocks ended a bruising session sharply lower on Wednesday amid worries over excessive equity valuations and as the Federal Reserve offered a cautious economic outlook due to Covid-19.

The Dow Jones Industrial Average finished down 2.1 percent, or about 635 points, at 30,303.17.

The broad-based S&P 500 fell 2.6 per cent to 3,750.77, while the tech-rich Nasdaq Composite Index also dropped 2.6 per cent to 13,270.60.

Stocks were in the red all day following mixed earnings from large companies.

Losses deepened during a news conference with Fed Chair Jerome Powell, following a statement from the central bank highlighting headwinds to the economic recovery after the United States imposed, then relaxed, sweeping business restrictions to combat Covid-19.

"The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic," the Fed's statement said.

Joe Manimbo, a foreign exchange analyst at Western Union Business Solutions, attributed the swoon in stocks to the Fed's "more cautious assessment of the economy."

Analysts also said investors have been unnerved over outsized gains by GameStop and AMC Entertainment, which have amplified worried about excessive equity valuations.

Dow component Boeing dropped 4.0 per cent as it reported an US$11.9 billion annual loss that included a hefty charge connected to the delayed timeframe for developing the 777X.

Fellow Dow component Walgreens Boots bucked the tide, surging 4.1 per cent as it announced the appointing of Starbucks' Rosalind Brewer as its new chief executive.

Starbucks, which reported lower quarterly profits on the continued hit from Covid-19, fell 6.5 per cent.

AFP