Dow Falls Nearly 1,200 Points; Stocks Now In Correction Territory
Johannes Eisele/AFP via Getty Images
Updated at 4:05 p.m. ET
Stocks continued their free-fall on Thursday, with major indexes falling into correction territory. The Dow Jones Industrial Average tumbled nearly 1,200 points as worries mounted about the economic toll of a widening coronavirus epidemic.
The Dow ended the day down 4.4%, and nearly 13% below its recent peak on Feb. 12. A drop of 10% from a recent high is the technical definition of a “correction.”
The broader S&P 500 index and the tech-heavy Nasdaq are also in correction territory. Both are down more than 12% from their recent peak, reached just last Wednesday.
President Trump tried to project a note of calm in a news conference Wednesday evening, stressing that the United States is well prepared for any health crisis and predicting the stock market will recover, thanks in part to robust consumer spending. But investors were not immediately reassured.
A poll by Morning Consult this week found that 69% of U.S. adults are either “very” or “somewhat” concerned about the domestic economic impact of the epidemic, a 14 point increase from a few weeks ago.
Goldman Sachs lowered its forecast of corporate profits for this year and next. The firm expects zero growth in profits in 2020, as a result of reduced economic activity in both China and the U.S., reduced demand for American exports, supply chain disruptions and increased uncertainty.
The steep drop in financial markets could put a dent in consumer confidence and spending — a major driver of the U.S. economy. It may also increase pressure on the Federal Reserve to lower interest rates. On Tuesday, the central bank’s vice chairman, Richard Clarida, said the Fed is monitoring the outbreak closely but he cautioned it’s too soon to assess the economic effects.
Health officials also reported the first known case of coronavirus in the U.S. with no apparent link to China or other sources, suggesting that the virus may be spreading domestically.