Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  News  >  Markets

News : Markets
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 

Stocks Fall About 2% as Fed's Powell Says Economic Outlook 'Highly Uncertain'

share with twitter share with LinkedIn share with facebook
05/13/2020 | 12:24pm EDT

By Joe Wallace and Frances Yoon

U.S. stocks dropped Wednesday after Federal Reserve Chairman Jerome Powell said the government may need to spend more to support the economy amid signs that recovery from the coronavirus-induced contraction will take longer than initially thought.

The S&P 500 extended losses, falling 2%, adding to its losses after the broad U.S. stock index fell more than 2% Tuesday. The Dow Jones Industrial Average lost 2.2%, or 539 points.

"The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II," Mr. Powell said in a speech Wednesday delivered online. "Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery."

Meanwhile, a gauge of U.S. business prices on Wednesday posted its largest decrease on record for April as the new coronavirus curtailed business activity. The producer-price index, a measure of the prices businesses receive for their goods and services, fell a seasonally adjusted 1.3% from the prior month, the Labor Department said.

Top Fed officials on Tuesday warned that the U.S. economic recovery following the coronavirus pandemic is likely to be uneven, with some sectors such as services and hospitality struggling to rebound. The economy is likely to need additional fiscal stimulus, and inflation will probably remain low for some time to come, according to the Fed's top Cleveland official, Loretta Mester. The unemployment rate could go as high as 20%, she said.

House Democrats on Tuesday released a roughly $3 trillion bill to battle the health and economic effects of the pandemic, staking out a position ahead of talks with Senate Republicans who are wary of additional spending.

Tensions between the U.S. and China added to the nerves among investors, who worry new frictions between the two largest economies could exacerbate the global downturn. Sen. Lindsey Graham on Tuesday proposed legislation that would allow President Trump to impose sanctions on China if it doesn't investigate the origins of the pandemic.

"We will have more and more noise around this issue," said Sophie Chardon, a strategist at Lombard Odier. Still, she expects Washington will ultimately seek to avoid the spat escalating into a repeat of the trade conflict. "At the end of the day, it's not good for the economy to have very high tariffs -- especially in a year when you have U.S. elections and you already have the Covid crisis."

New outbreaks of the coronavirus in South Korea and elsewhere have prompted investors to question whether the U.S. economy will exit lockdown as quickly as they had hoped, according to Nicholas Brooks, head of investment research at Intermediate Capital Group.

"In the background, that's really the key driver of markets at the moment," Mr. Brooks said. "If we don't get that V-shaped recovery, which I think is unlikely, markets will correct."

Adding to the uncertainty, top Trump administration health officials on Tuesday emphasized the need for caution and widespread testing while easing coronavirus lockdowns. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned in a Senate hearing that there could be a new wave of infections in some states if there is a premature reopening of schools and businesses.

The yield on the U.S. 10-year Treasury note edged down to 0.662%, from 0.679% on Tuesday, suggesting that bond investors remain risk averse.

In Europe, the benchmark Stoxx Europe 600 fell 1.5%. Benchmarks in Asia ended the day mixed. India's S&P BSE Sensex index jumped 2.2% after Prime Minister Narendra Modi set out an economic relief package.

Karen Langley contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com and Frances Yoon at frances.yoon@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
AT HOME GROUP INC. 3.91% 6.64 Delayed Quote.20.73%
BYD COMPANY LIMITED 13.55% 67.9 End-of-day quote.74.77%
DJ INDUSTRIAL 0.36% 25827.36 Delayed Quote.-9.50%
JUST GROUP PLC -4.49% 48.9 Delayed Quote.-38.10%
NASDAQ 100 0.61% 10341.891881 Delayed Quote.18.42%
NASDAQ COMP. 0.52% 10207.628547 Delayed Quote.13.76%
S&P 500 0.45% 3130.01 Delayed Quote.-3.12%
SEEK LIMITED 1.27% 22.27 End-of-day quote.-1.24%
SENSEX 30 0.50% 36021.42 Real-time Quote.-12.68%
THE GLOBAL LTD. 0.97% 209 End-of-day quote.-55.63%
WILL GROUP, INC. 0.32% 636 End-of-day quote.-49.20%
WORLD CO., LTD. -1.19% 1496 End-of-day quote.-44.41%
share with twitter share with LinkedIn share with facebook
Latest news "Markets"
07/03LONDON STOCK EXCHANGE : UK stocks slide on COVID-19 concerns, FTSE 100 erases weekly gains
07/03EUROPE : European stocks slide as surge in virus cases hits rebound hopes
07/03European Stocks Drift Lower With U.S. Markets Shut
07/03European Stocks Drift Lower With U.S. Markets Shut
07/03European Stocks Drift Lower With U.S. Markets Shut
07/03WALL STREET STOCK EXCHANGE : Everything is not what it seems…
07/03European Stocks Waver With U.S. Markets Shut
07/03European Stocks Waver With U.S. Markets Shut
Latest news "Markets"