Stocks are opening sharply lower on Wall Street as investors turn jittery once again in the face of rising numbers of coronavirus infections in many U.S. states and countries. The S&P 500 was down 2.5% in early trading Thursday. Stocks have been rallying over the past two months at a rate that many skeptics said was unsustainable and that didn’t reflect the dire condition of the economy. The Federal Reserve warned a day earlier that the road to recovery would be long. European and Asian markets also fell. Bond yields fell. The price of crude oil dropped 7%.
Global stock markets tumbled Thursday after the Federal Reserve signaled a long path to recovery from the devastation of the coronavirus pandemic and amid reports of rising numbers of coronavirus infections in many countries.
In the U.S., Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of U.S. cases has surpassed 2 million.
Globally, India reported a record number of nearly 10,000 new coronavirus cases over the past 24 hours with health services in the worst-hit cities of Mumbai, New Delhi and Chennai becoming swamped by the rising infections.
In South Korea, the latest 45 new cases came in a weekslong resurgence that health authorities said they fear might develop into a massive wave.
Such developments have raised alarm, said Stephen Innes of AxiCorp.
“After all, a secondary outbreak is nothing to sneeze at as traders remain in a state of risk limbo watching risk assets for signs of continuation or stall,” Innes said in a commentary.
In Europe, France’s CAC 40 was 2.6% lower at 4,923 and Germany’s DAX dropped 2.6% to 12,203. Britain’s FTSE 100 fell 2.4% to 6,179.
Japan’s benchmark Nikkei 225 sank 2.8% to close at 22,472.91, while Australia’s S&P/ASX 200 skidded 3.1% to 5,960.60.
South Korea’s Kospi dropped 0.9% to 2,176.78 and Hong Kong’s Hang Seng slipped 2.3% to 24,480.15. The Shanghai Composite shed 0.8% to 2,920.90.
The outlook for a recovery from the worst downturn in decades is uncertain as states and countries push ahead with reopenings from pandemic shutdowns.
Brazil, Mexico, South Africa, India and Pakistan are among countries easing tight restrictions before their first outbreaks have peaked and before establishing detailed surveillance and testing systems to keep the virus under control.
Health experts have warned that could ultimately have devastating consequences.
The Federal Reserve emphasized Wednesday that the central bank will keep providing support to the economy by buying bonds to maintain low borrowing rates.
It forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.
In other trading, benchmark U.S. crude oil dropped $1.68 to $37.92 a barrel. Brent crude, the international standard, fell $1.45 to $40.28 a barrel.
The dollar was trading at 107.10 Japanese yen, down slightly from 107.12 yen late Wednesday. The euro inched down to $1.1359 from $1.1377.