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US: Stocks plunge on revived coronavirus fears, Dow -6.9%
[NEW YORK] Wall Street stocks plunged on Thursday as revived worries about the coronavirus and about excessive equity prices produced the worst session since March, when the turmoil over Covid-19 was at its peak.
The Dow Jones Industrial Average plummeted 6.9 per cent or more than 1,850 points to 25,128.17.
The broad-based S&P 500 dove 5.9 per cent to 3,002.10, while the tech-rich Nasdaq Composite Index sank 5.3 per cent to 9,492.43, ending a streak of three straight record closes.
After weeks of focusing on the positive side of reopening the US economy, investors on Thursday shifted attention to rising coronavirus cases in some states that have reopened, including Texas and Arizona.
Treasury Secretary Steven Mnuchin said on CNBC the government would not waiver from its push to get businesses operating, saying "We can't shut down the economy again."
But investors fear rising case counts could depress economic activity even if authorities decline to reinstate the lockdowns.
Beyond that, analysts have described equity valuations as "frothy" following gains since March and do not reflect the grinding recovery many economists anticipate.
"We've been talking about the optimism trade for a while, and it just ran into some facts," JJ Kinahan, chief market strategist at TD Ameritrade, said in a note.
"The facts are we're not fully reopened and businesses aren't all the way back," Mr Kinahan said. "Basically, the market got out a little over its skis."
The Labor Department reported that another 1.54 million US workers filed for unemployment benefits last week, bringing the total initial claims since the shutdowns began in mid-March to 44.2 million, although some have returned to work.
First-time claims have fallen for 10 consecutive weeks, but remain higher than at any point during the aftermath of the 2008 global financial crisis, a gloomy reminder of the headwinds facing the US economy.
Losses were broad-based, but some of the worst affected sectors included banks such as Bank of America, down 10.0 per cent, oil services companies like Halliburton, down 15.4 per cent, and travel-oriented companies including United Airlines, down 16.1 per cent and Marriott International, down 10.9 per cent.
Boeing dove 16.4 per cent, hit by the pullback in the broader market as well as news that 737 MAX contractor Spirit AeroSystems had furloughed staff and halted work on the MAX at Boeing's request. Spirit fell 15.6 per cent.
Grubhub rose 4.6 per cent after agreeing to be acquired by Anglo-Dutch meal delivery firm Just Eat Takeaway.com for US$7.3 billion, which would form the world's largest online food delivery company outside of China.