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All three major US markets sink as investors fret over long recovery

The Dow plummeted 6.9 percent on Thursday in its sharpest one-day decline since the start of the coronavirus as investors face the prospect of a slow perhaps painful recovery. The Dow Jones industrial average plunged 1,861.82 points, to close at 25,128.17, while S&P 500 slid 5.9 percent, to 3,002.10. Even the Nasdaq Composite index of …

The Dow plummeted 6.9 percent on Thursday in its sharpest one-day decline since the start of the coronavirus as investors face the prospect of a slow perhaps painful recovery.

The Dow Jones industrial average plunged 1,861.82 points, to close at 25,128.17, while S&P 500 slid 5.9 percent, to 3,002.10. Even the Nasdaq Composite index of tech stocks, which has been less affected by the pandemic, dropped 5.3 percent, to end the day at 9,492.73.

The one-day rout marked the major averages’ worst day since March 16, when they all dropped more than 11 percent as governors started ordering restaurants to close their doors and non-essential workers to stay home.

Driving the plunge are reports of rising COVID-19 cases in states that have recently reopened their economies, including Texas, Arizona and California.

Investors were shaken by a jobs report that showed 1.54 million more jobless claims, a number that was within estimates, but stood in stark contrast to the surprise addition of 2.5 million jobs to the economic picture just last week.

The Federal Reserve fanned the flames on Wednesday with its dire predictions that things will get worse before they get better. In its first projections for the year, the Fed forecast that US GDP will slump by 6.5 percent in 2020 with a rebound of 5 percent hitting in 2021.

“We have to be honest that it’s a long road,” Fed Chair Jerome Powell cautioned during a news conference outlining the findings, while confirming that interest rates will remain unchanged.

“The same old worries came back today. Spreading of COVID-19 to new areas, worries over the economy, and a historically overbought stock market” Ryan Detrick, Senior Market Strategist at LPL Financial wrote after the closing bell. “They say the stock market is an escalator up and an elevator down, we sure saw that today.”

Thursday’s dramatic reversal felt to many like a bubble of optimism being punctured by a dose of reality.

“What was learned over the past three months is that nobody has any idea what the market will do in the short term,” mused Michael Batnick, director of research at Ritholtz Wealth Management. “We went from recession to depression to recovery to euphoria in 100 days. And now this.”

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