Stocks Fall, Dow Plunges Over 400 Points As Reopening Of The Economy Continues

The market opened slightly higher but later turned negative on Tuesday, falling around 2% as Wall Street continued to assess the risks of reopening the economy too soon.

 

The Dow Jones Industrial Average fell 1.9%, over 400 points, on Tuesday, while the S&P 500 lost just over 2% and the Nasdaq was down 2.1%.

 

Stocks opened 0.5% higher, before turning negative in the afternoon and falling sharply in the last hour of trading.

 

House Democrats released their latest coronavirus relief bill wishlist, worth $3 trillion, with a vote scheduled for Friday. The package includes federal aid to states, more stimulus checks, hazard pay for essential works, funding for testing and more unemployment insurance.

 

The major averages declined after Republican Senator Lindsey Graham pushed legislation to demand China either cooperate with an investigation into the origins of coronavirus or face sanctions.

 

Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, warned a Senate committee on Tuesday that the U.S. does not yet have the coronavirus outbreak “completely under control” and that the national death toll is “likely higher” than current levels.

 

U.S. consumer prices in April—the latest slew of sobering economic data, showed a drop of 0.8% last month, the most since 2008, according to the Labor Department.

 

The CBOE Volatility Index (VIX), Wall Street’s fear gauge, has come way down since the market’s wild months in March and April, however: After peaking at 82.7 in late March—amid the height of the coronavirus selloff—it’s now down to 26.4.

 

Stocks have been rising in recent weeks, despite coronavirus headwinds, as Wall Street becomes more optimistic about a reopening of the economy and some states allow businesses to reopen.

 

“It’s certainly encouraging that business conditions appeared to have troughed in early April,” says Adam Crisafulli, founder of Vital Knowledge. But the declines compared to last year “remain enormous, and it will be some time before trends return to precrisis levels.”

 

“It’s been a rough year for the banks,” according to Bespoke Investment Group. “Despite coming into this crisis much better capitalized than they were during the last, the sector still hasn't been able to avoid the pain.” Banks are down about 40% so far in 2020, which is worse than any other industry group in the S&P 500, the firm’s data shows.

 

Boeing CEO Dave Calhoun said in an interview with NBC on Tuesday that he doesn’t expect air travel to return to normal in 2020 and warned that a major airline might go out of business later this year.