Global Stocks Retreat As Virus Concerns Mount

Wall Street stocks suffered bruising losses Wednesday following an ugly session on European bourses amid worries over excessive equity valuations and as the Federal Reserve offered a cautious economic outlook due to Covid-19.

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

Losses deepened during Fed Chair Jerome Powell's news conference, and the central bank statement highlighting headwinds to the rebound.

"Overall economic activity remains below its level before the pandemic, and the path ahead remains highly uncertain," Powell said.

Analysts are hopeful about an economic rebound later this year with the rollout of coronavirus vaccines, but the rollout has been glitchy in the United States and elsewhere amid supply challenges.

The European Union and Britain were on a collision course over sparse vaccine supply from AstraZeneca. Brussels and London each insisted the Anglo-Swedish pharmaceutical company uphold contractual delivery promises to each of them -- even as the company said there was not enough to go around.

"Sentiment has been hurt in part due to concerns about the vaccine delays in Europe, while profit-taking ahead of key technology earnings reports and the conclusion of the Federal Reserve's policy meeting also weighed on asset prices," said Fawad Razaqzada at ThinkMarkets.

On Wednesday, daily global deaths from Covid-19 topped 18,000 for the first time, the latest reminder of the pandemic's devastating impact as governments tightened restrictions in a bid to contain alarming new coronavirus strains.

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

Briefing.com analyst Patrick O'Hare said Wednesday's battering in stocks reflect investor skittishness following outsized gains in recent days by GameStop and AMC Entertainment, which created a "short squeeze."

That occurs when prices rise as short-sellers, who bet on a drop in stock price but are then confronted with a surprise increase, are forced to buy shares to stem their losses. Shares of GameStop were up 105 percent, while AMC was up nearly 250 percent.

US regulators said they are watching the volatility and the actions of market players.

Those kind of increases are "the type of mania longtime investment professionals know is often associated with a market that is overheated and in need of a rest/correction," O'Hare said.

Analysts also said the retreat suggested big losses at some firms liquidating positions to raise cash.