Instant View: Wall Street backslides on economic gloom, uptick in virus cases

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NEW YORK (Reuters) – Wall Street indexes nosedived on Thursday, on track for their worst days since early in the coronavirus pandemic as investors reassessed a stocks resurgence after the Fed issued a gloomy growth forecast and infections showed signs of upswing.

FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri

The Dow Jones Industrial Average .DJI and S&P 500 .SPX were on track for their biggest daily percent slides since March 18. The Dow was down 5.39%, the S&P down 4.52%, while the Nasdaq Composite which set its third record high close in a row on Wednesday .IXIC was off 3.71%, which would be it’s deepest slide since April 1, if it holds.

COMMENTS

JOHN DOYLE, VICE PRESIDENT OF TRADING AND DEALING AT TEMPUS INC., WASHINGTON

“This historic gain in equities is getting a reality check. There are some concerns about re-infections, but my thought is that today is not so much different from the beginning of the week. But perhaps because of how fast and how hard equities have gone up, traders are looking for an excuse to take profits and take them off their highs.”

DAVID KOTOK, CHAIRMAN & CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, FLORIDA

“Everything changed with COVID fear. It provides nerve-wracking violent moves which can induce more fear or provide trading opportunities depending on the investor and their capability and discipline. I haven’t deployed any cash in this selloff yet. That could change at any time. I raised cash into the rally. At this point I wish I’d raised more. I sold stocks and raised cash.

“It is a combination of unknown economics and a very sobering and accurate assessment by the Fed and Powell and a fear of a second wave, which is a realistic and genuine fear.

“Do we have a 5-8pct correction within a bull market that started with the bottom on March 23? Yes (we) might. Does the decline get more serious? It might. I don’t think I can guess which it is. That’s why I haven’t committed any cash. I don’t want to catch a falling knife.”

ANTHONY VALERI, DIRECTOR OF INVESTMENT MANAGEMENT, ZIONS BANCORPORATION, SAN DIEGO

“It’s a culmination of events. The market has been up so much from March, up 43% at one point, history shows that when you have that kind of steady move up you’re ripe for some kind of consolidation. Yesterday after Powell began to speak his tone was really downbeat, he really stressed that we have a long way to go to repair the jobs market. So that injected a note of reality. (That) was reiterated this morning with the jobs numbers. Then there are fears of a second wave of the virus. On balance that is the least important (factor) but it alerted people to the situation.”

MATT MISKIN, CO-CHIEF INVESTMENT STRATEGIST, JOHN HANCOCK INVESTMENTS

“Risk assets had run too far too fast in our view pricing in a very optimistic and speedy economic recovery. The Fed gave the markets a reality check yesterday forecasting economic growth to not return to pre-COVID-19 levels until the end of 2021.”

MARC CHANDLER, CHIEF MARKET STRATEGIST AT BANNOCKBURN GLOBAL FOREX, NEW YORK

“A lot of people are putting this at the feet of the Fed, but I don’t buy it. …. Since about the middle of May there has been this liquidity driven surge in risk assets and I think that rather than the Fed making investors rethink, it confirmed what we know. I think today is a big ‘buy the rumor sell the fact’.”

Compiled by Alden Bentley

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