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Stocks - Dow Dives as Powell Warns of Long Road to Recovery

Stock Markets May 13, 2020 02:41PM ET
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By Yasin Ebrahim

Investing.com – The Dow plunged on Wednesday as Federal Reserve Chairman Jay Powell warned of a protracted road to recovery for the economy at a time when many are concerned that reopening too quickly could trigger a second wave of Covid-19 infections.

The Dow Jones Industrial Average fell 2.32%, or 550 points, the S&P 500 slumped 2.19%, while the Nasdaq Composite lost 2.08%.

Underscoring the severe impact of the pandemic, Powell said the scope and speed of the economic downturn are "significantly worse" than any recession since World War II and hit back against calls to cut rates below zero, which he said had yet to prove an effective policy tool.

"We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased," Powell said in prepared remarks. "This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future."

As efforts to reopen the economic continue, New York state is dealing with an illness potentially related to the novel coronavirus that has caused inflammation in children.

Gov. Andrew Cuomo said Wednesday that the state is investigating 102 cases of children with an inflammatory illness possibly connected to coronavirus - 60% of the sick children tested positive for Covid-19.

U.S.-China tensions were also in the spotlight as President Donald Trump continued to pin blame on China for the current pandemic, with some raising concerns over whether the current trade deal with China is at risk of getting scrapped.

Axios reporter Jonathon Swan said that President Trump's latest tweet criticizing China comes "amid internal discussions over whether Trump blows up the China trade deal".

Downside in the broader market was led by energy, as oil prices slipped despite an unexpected draw in weekly U.S. inventories as concerns over a deeper recession cooled some hopes of a recovery in demand.

Financials, meanwhile, continued their weak start to the week, paced by an ongoing decline in banking stocks as U.S. bond yields slipped after Powell's cautious outlook and ongoing data that continued to highlight the impact of the pandemic.

JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were down more than 2%.

The Labor Department said on Wednesday, its producer price index for final demand fell 1.3% last month, wider than economists' forecasts for a 0.5% decline.

Technology stocks, meanwhile, also contributed to the selloff, led by Alphabet (NASDAQ:GOOGL) and Facebook (NASDAQ:FB), but Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) remained above the flatline.

Stocks - Dow Dives as Powell Warns of Long Road to Recovery
 

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Comments (22)
HJ Index
HJ Index May 13, 2020 9:32PM ET
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truth hurts.
Jean Racine
Jean Racine May 13, 2020 4:30PM ET
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How Trump manages to work around so many negative people? It is so frustrating to hear those negatives speeches. Mama mia! Speak positively and act positively help everybody to go on positively. These guys ruined the beginning of my day and all I can talk to my spouse and children is negative, Negativity is worse than the Coronavirus.
Gilles Nadon
Gilles Nadon May 13, 2020 4:30PM ET
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do not confused negativity with realism
James Garced
James Garced May 13, 2020 4:30PM ET
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Hopium is one heck of a drug
Jean Racine
Jean Racine May 13, 2020 4:21PM ET
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I saw the Bad & the Ugly but what had they done with the Good? You are fired! These two guys are not fit for their jobs. They are two negatives and not a positive among them to balance the ****** People is the economy; as long as we have 70% of the people alive we have to remain a great economy after all those incentives after all. ******!!
Ludovic Raymond
Ludovic Raymond May 13, 2020 4:15PM ET
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I think our Supreme leader should fire; Powell is a vilain who does bot like him as he brings obvious bad news. Plus, he is going to cause Trump’s defeat in the upcoming election
May 13, 2020 4:15PM ET
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if trump reignites trade war then trump signed his own reelection bid, last thing what markets and consumers need are new tarrifs that gonna drill deeper in the economy and in the cashbags
Ricky Singh
Ricky Singh May 13, 2020 4:10PM ET
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All planned moves by corrupts !!!Move up when it doesnt make sense and maul it down when they want to drain the markets !Scare the public and make money is new agenda!
steven gitt
steven gitt May 13, 2020 3:18PM ET
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democrat run states have been the least prepared, most affected, and needing the most federal assistance. and democrats think the solution is to let a dementteed old perrveeerrt from the DNC run the country?
Thom Miller
Thom Miller May 13, 2020 3:18PM ET
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Let’s Gitt this straight: The reason the virus has hit the Blue states harder than the Red ones is because the Blue states represent the more cosmopolitan & better educated among us, who therefore are more naturally suited and inclined to have a greater number of worldly personal contacts with foreign nationals, who are similarly better educated & more refined. The virus is more easily transferred among these folks, in contrast to the Red state members, who tend to live a much more aggrarian and sheltered lifestyle “down on the farm.” Why do you think all the money resides in the Blue states? And why do you think the Blue states subsidize the Red states with their Federal tax $$? Just to complete the circle of logic here....why do you think members of the Red states are less educated, more obese, & more poverty stricken than those in the Blue states? This has nothing at all to do with “preparedness.” And if you truly believe this, I can only conclude you are uneducated and obese.
Brandon Rinebold
Brandon Rinebold May 13, 2020 3:18PM ET
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It actually is nearly entirely due to population density. blue states have more people per square mile and therefore the people who live there contact more people on a regular basis.The red state that has more high density cities (Texas) is hit similarly to the upper end blue states. It has nothing to do with anyone being better or better prepared. If you live around more people it's easier to spread resperitory illnesses just because they're within cough, sneeze, and breathing range of more people in any given day.
steven gitt
steven gitt May 13, 2020 3:15PM ET
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democrat run states have been the least prepared, most affected, and needing the most federal assistance. and democrats think the solution is to let a demmentteed old peerrveeerrt from the DNC run the country?
john richards
john richards May 13, 2020 3:03PM ET
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LMAO emergency measures are still in place from 2009.
Thom Miller
Thom Miller May 13, 2020 2:53PM ET
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Bottom Line Fact: All of us made tons more in the stock market during both the Clinton and Obama Administrations than we did during the Bush #2 and Dr Donny terms. Go look it up!
john richards
john richards May 13, 2020 2:53PM ET
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Bottom Line Fact: Nobody trades the election news on inauguration day.    All of you lost your a88 in dotcom and still consider the no rate hikes in eight years of the gig and sharing economy highly successful. Go look it up!
sai karumuru
sai karumuru May 13, 2020 2:53PM ET
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lol @john
Thom Miller
Thom Miller May 13, 2020 2:53PM ET
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john richards My dotcom company us currently worth $80 million. And yours? Oh, I’m sorry....you live in a Red state.
Jeremy Williams
Jeremy Williams May 13, 2020 2:51PM ET
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Where are all the bulls that have been on here talking smack?
 
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