Wednesday’s Stock Market Open: US Equities Fall As IMF Slashes Global GDP Forecast

Update: 12:05 p.m. EDT:

U.S. stocks incurred deeper losses as of noon Wednesday.

The Dow Jones Industrial Average dropped 778.7 points to 25,377.40, while the S&P 500 fell 88.7 points to 3,042.59 and the Nasdaq Composite Index tumbled 259.98 points to 9,871.39.

In Europe markets plunged, as Britain’s FTSE-100 dropped 3.11%, while France’s CAC-40 slid 2.92% and Germany’s DAX fell 3.43%.

Crude oil futures were down almost 7%.

Original story:

U.S. stocks fell on Wednesday as the International Monetary Fund offered a grim outlook for the global economy and covid-19 cases continued to surge.

The Dow Jones Industrial Average dropped 236.74 points to 25,919.36, while the S&P 500 fell 22.23 points to 3,109.06 and the Nasdaq Composite Index tumbled 37.44 points to 10,093.93.

The International Monetary Fund said global gross domestic product will shrink by 4.9% in 2020 (a bigger contraction than its previous 3% estimate).

IMF also warned public finances will deteriorate as governments battle the coronavirus crisis.

“The Covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said.

White House health advisor Dr. Anthony Fauci warned on Tuesday that the U.S. is witnessing a “disturbing” surge in new Covid-19 cases. But Fauci, the director of the National Institute of Allergy and Infectious Diseases, also said he expects a virus vaccine by early 2021.

Arizona, Texas, Florida, California and Montana have seen a recent spike in covid-19 infections.

“The way hospitalizations are spiking, the way that daily new cases are spiking — surely the public can understand that if those spikes continue, additional measures are going to be necessary to make sure we maintain the health and safety of the people of the state of Texas,” said Texas Gov. Greg Abbott on Monday.

“The outbreaks have given markets the unpleasant reminder that the pandemic is far from over and that the economic recovery may be slower than expected,” said Mobeen Tahir, associate director of research at WisdomTree in London.

The Federal Housing Finance Agency House Price Index rose 0.2% in April from the previous month.

Overnight in Asia, markets finished narrowly mixed. The Shanghai Composite edged up 0.3%; Hong Kong’s Hang Seng fell 0.5%; while Japan’s Nikkei-225 slipped 0.07%.

In Europe markets traded lower, as Britain’s FTSE-100 dropped 1.92%, while France’s CAC-40 slid 1.68% and Germany’s DAX fell 1.74%.

Crude oil futures dropped 1.49% at $39.77 per barrel, Brent crude fell 1.24% at $42.20. Gold futures slipped 0.31%.

The euro fell 0.36% at $1.1267 while the pound sterling slipped 0.34% at $1.2478.