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Stock Market has Worst Day Since March

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London (CNN Business)The stocks mega-rally hit a roadblock: A somber economic outlook from the US Federal Reserve and the 2 millionth coronavirus case in the United States has investors questioning whether they had boosted the stock market too far, too fast.

US stocks plummeted into the close, with all three indexes recording their worst performances since March 16 — when the stock selloff over worries how the pandemic would affect the economy was at its worst.
The Dow (INDU) closed 1,862 points, or 6.9%, lower. The index fell back below 26,000 points for the first time since the start of the month.

The S&P 500 (SPX) ended down 5.9%, closing at its lowest total points since late May. Only one S&P stock, grocery chain Kroger (KR), closed in positive territory.
The Nasdaq Composite (COMP), which hit all-time highs on the first three days of the week, closed 5.3% lower. The index recorded three all-time highs in a row at the start of the week and finished above 10,000 points for the first time in history Wednesday, but on Thursday it fell back to a level not seen since late May.

US crude oil prices settled at $36.34 a barrel, down 8.2%.
The rising number of coronavirus cases in the United States has unnerved Wall Street. A second wave of infections could force many businesses to close again just after they reopened.
Treasury Secretary Steven Mnuchin said the US economy wouldn’t be shut down again despite the rising case count.

“We can’t shut down the economy again. I think we’ve learned that if you shut down the economy, you’re going to create more damage, and not just economic damage, but there are other areas,” he told CNBC in an interview.

Mnuchin said more than a trillion dollars would be pumped into the economy over the next month.
Federal Reserve Chairman Jerome Powell said Wednesday that the economic future was highly uncertain.
Although Powell acknowledged that the May jobs report, which showed a 2.5 million jobs added to the economy, was a welcome surprise, he noted that many millions of Americans will never go back to their jobs and could remain unemployed for years.

Another 1.5 million Americans filed for first-time unemployment benefits last week, data from the Department of Labor showed Thursday. The number of continuing jobless claims, counting people who have applied for benefits for at least two weeks in a row, remains above 20 million.
The Fed projects the unemployment rate to fall to 9.3% by year-end from 13.3% in May. Prior to the pandemic, in February, the unemployment rate was near a 50-year low of 3.5%.

The gross domestic product — the country’s broadest measure of the economy — is expected to plummet 6.5% this year before rebounding.
The central bank is expected to keep its foot on the stimulus pedal for the foreseeable future. The central bank doesn’t expect to raise interest rates this year or in 2021, according to the so-called dot plot, which maps out committee members monetary policy expectations. Even in 2022, only two policy makers expect a hike.

“We’re not thinking about raising rates — we’re not even thinking about thinking about raising rates,” Fed Chairman Jerome Powell told reporters during a press conference.
Usually low interest rates are good for stocks because it gets cheaper for companies to borrow money. But at the moment, low rates for longer also mean that the economy won’t be back on its feet for a while.

President Donald Trump said in a tweet that the Fed was often wrong, adding “We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021.”

Global stocks also dropped sharply. Japan’s Nikkei 225 (N225) finished down 2.8% and Hong Kong’s Hang Seng Index (HSI) closed down 2.3%. China’s benchmark Shanghai Composite (SHCOMP) gave up 0.8%. In Europe, Germany’s DAX (DAX) finished down 4.5%, while France’s CAC 40 (CAC40) shed 4.7%. The FTSE 100 (UKX) declined nearly 4% in London.

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