US Market tumbles as coronavirus anxiety grows

The US equity market finished first session of the new month and second quarter of the year deeply in red on Wednesday, 01 April 2020, as investors fled to safe-haven assets amid deepening concerns about the global economic impact of the coronavirus pandemic. Meanwhile, disappointing U.S. manufacturing activity and private payrolls data also weigh on investor sentiment. At closing bell, the Dow Jones Industrial Average plunged 973.65 points or 4.4% to 20,943.51. The S&P 500 tumbled 114.09 points or 4.41% to 2,470.50. The Nasdaq Composite slumped 339.52 points or 4.41% to 7,360.58.

Investors fled to safe-haven assets amid concerns that a longer economic shutdown that's likely to devastate corporate profits and dividends, and economy. The U.S. President Donald Trump warned Americans of a painful two weeks ahead, with White House health officials modeling an enormous jump in virus-related deaths between 100,000 and 240,000 even with strict social distancing measures.

 

Goldman Sachs now expects sequential real U.S. GDP to plummet 34% in the second quarter on an annualized basis, foreshadowing a deep economic slump.

Elsewhere, West Texas oil fluctuated around $20 a barrel after Trump's pledge to meet with feuding producers Saudi Arabia and Russia to support the market failed to bolster prices substantially.

Interest-rate sensitive stocks on the banking index fell 5%, while airlines, hotels and cruise operators shed between 5% and 7%. The energy sector shed another 3%. Meanwhile, real estate, utilties and consumer staples stocks, which had held up so far as they are considered stable during times of extreme volatility, fell between 1% and 7%.

On the U.S. economic front, payroll processor ADP released a report showing a modest decrease in private sector employment in the U.S. in March, although the data does not reflect the full impact of the coronavirus-induced shutdown. ADP said private sector employment fell by 27,000 jobs in March after jumping by a downwardly revised 179,000 jobs in February. ADP also noted its national employment report, or NER, only utilizes data through the 12th of the month, which is the same period the Labor Department uses for its more closely watched monthly jobs report. "As such, the March NER does not fully reflect the most recent impact of COVID-19 on the employment situation, including unemployment claims reported on March 26, 2020," said Ahu Yildirmaz, co-head of the ADP Research Institute.

A separate report from the Institute for Supply Management showed a relatively modest contraction in U.S. manufacturing activity in the month of March. The ISM said its purchasing managers index dipped to 49.1 in March after edging down to 50.1 in February. A reading below 50 indicates a contraction in manufacturing activity,

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