Stocks nosedived on Wednesday as the economic fallout from the coronavirus pandemic widens, with companies such as Marriott furloughing workers and restaurants across the country closing their doors. The decline reverses yesterday's sharp rise when investors were buoyed by a potential $1 trillion stimulus package.
The Dow fell 1,229 points, or 5.8%, to 20,008, while the broad-based S&P 500 fell 5.4% and tech-heavy NASDAQ lost 4.8%.
The widening pandemic, which has led to at least 109 deaths in the U.S., is prompting cities and states across the U.S. to order residents to stay home and to shut restaurants and bars. Those measures are spiraling through the economy, leading to layoffs and sharp declines in revenue for many consumer-focused businesses. The U.S. is likely already in a recession, according to Oxford Economics.
"We now see a severe global recession occurring in the first half of 2020," Deutsche Bank's economists wrote in a research note. "The quarterly declines in GDP growth we anticipate substantially exceed anything previously recorded going back to at least World War II."
The decline on Wednesday wipes out yesterday's market gains, which were fueled by President Donald Trump and Treasury Secretary Steve Mnuchin announced they're working on a "big" and "bold" legislative package to address the coronavirus crisis. Mnuchin added that the administration is "looking at sending checks to Americans immediately."
That bounce followed Monday's rout that marked Wall Street's worst day since the epic "Black Monday" crash in 1987.
While it's unclear how long the coronavirus pandemic will last, President Trump earlier this week said it could go on through July or August. In the short-term, economists say the damage could be deep, leading to job losses, a spike in unemployment and a decline in GDP.
"Attention is understandably focused on limiting the damage from the short-term effects of the coronavirus outbreak," Oxford Economics said in a Wednesday note. "But it's likely that, once disruption and uncertainty fade, the rebound in global economic activity will be strong. It's important for firms to position themselves for such a recovery."
