Market had entered a new phase after the initial shock

Stocks fell Wednesday after President Trump issued a stark new warning on the spread of the novel coronavirus in the U.S., reviving concerns about the potential damage to the world’s largest economy.

Trump warned that the U.S. could face as many as 240,000 deaths as he asked Americans to brace for an unprecedented crisis in the days ahead. The nation has more confirmed cases than any other country, with more than 189,000 infections, and projections from the University of Washington show the illness could result in 2,214 deaths a day at the peak in two weeks.

All 11 sectors of the S&P 500 were down on Wednesday, with real-estate companies, utilities and financials among the worst decliners. JPMorgan Chase shares fell 5.2%. Banks have been squeezed by both the decline in business activity and the Federal Reserve slashing interest rates to near zero.

Philip Blancato, CEO of Ladenburg Thalmann Asset Management, said the market had entered a new phase after the initial shock of the pandemic triggered a precipitous drop in major stock indexes. Stocks are cheap enough now that investors are eyeing opportunities and hoping the market will bottom out once measures to battle the virus show signs of effectiveness, he said.

Oil remains under devastating pressure. Fear of “dwindling” demand as the US prepares for greater restrictions on economic activity as it tops the negative rankings for the highest number of coronavirus infections and the war for market share Saudi Arabia and Russia are the main market drivers for black gold, and until we hear positive news on one of these topics, there is no reason to expect an improvement in the foundation.

Dollar gain remains after the Fed took fresh steps to alleviate stresses in currency markets. On Tuesday, the U.S. central bank said it would launch a temporary lending facility that would allow foreign central banks to convert their holdings of Treasury securities into dollars.

While stimulus packages are good for the economy, there might be a need for “trillions more”.


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