By Yasin Ebrahim
Investing.com – The Dow closed below 20,000 for the first time in three years, dragged down by energy after oil prices plunged to an 18-year low on Wednesday amid a precarious future for the travel industry and the broader economy as the Covid-19 pandemic gathers pace.
The Dow fell 6.3%, or 1,335 points to 19.902, the S&P 500 slumped 5.2% and the Nasdaq Composite fell 4.7%. The Dow has wiped out nearly all the gains since President Donald Trump was inaugurated. The Dow stood at 19,827.247 on Jan. 20, 2017.
Oil prices settled 24% lower in their biggest daily rout since 2002 amid ongoing fears about weaker demand at the time when the travel industry has been under pressure following the novel coronavirus outbreak.
The selloff in the broader market comes even as reports suggested that the U.S. lawmakers were making on progress on a stimulus package worth about $1.3 trillion that would increase numerous initiates to support the economy, including checks to qualifying Americans, and bailouts to airlines.
The Senate, meanwhile, is set to pass the House bill from last week to expand paid leave and unemployment benefits.
But those efforts are unlikely to stop a deep economic fallout, with Hedge fund founder Bill Ackman insisting that closing the country down for 30 days is the only option to contain the coronavirus outbreak.
U.S. GDP could fall 4% this quarter and 14% next quarter, and for the year is likely to shrink 1.5%, J.P. Morgan warned on Wednesday.
Financials, also led the broader decline on Wall Street, as banking stocks fell sharply amid ongoing concerns that net interest margins will compress amid low-interest rates and a likely recession will ramp up the cost of credit.
JPMorgan Chase (NYSE:JPM) fell 10.5% and Goldman Sachs (NYSE:GS) fell 12%. Bank of America (NYSE:BAC) fell 5.4%.