Dow Sinks as Energy Turns Negative on Oil Slump Amid Growing Covid-19 Infections
By Yasin Ebrahim,
Investing.com - The Dow continued its selloff on Friday, as energy stocks turned negative after oil prices gave up some of their gains from a day earlier as fears over the economic impact of the coronavirus pandemic continue to mount, with the World Health Organisation warning that the outbreak "isn't just a bad flu season."
The Dow fell 2.99%, or 600 points, the S&P 500 slumped 3.26% and the Nasdaq Composite fell 2.22%.
"This is not normal. This isn't just a bad flu season. These are health systems that are collapsing under the pressure of too many cases. This is not normal, this is not just a little bit worse than we're used to," Dr. Mike Ryan, executive director of the World Health Organization health emergencies program said, according to media reports. Ryan also said the current testing would need to be scaled up by "approximately 80 to 100 times."
The stark warning comes over the spread of the virus, which has infected nearly 270,000 worldwide and killed about 11,266 so far, comes at a time when many concerns over a plunge in travel demand continued to hurt oil prices and forced energy stocks to give up gains, sending the broader market deeper into the red.
Oil settled 10.7% lower, erasing the bulk of its gains from a day earlier, when Crude Oil WTI Futures recorded its biggest one-day percentage gain ever.
Fears over a virus-led recession, meanwhile, continued to weigh on sentiment despite unprecedented action by global central banks to limit the economic fallout from the Covid-10 pandemic.
The Federal Reserve on Friday announced a range of liquidity boosting measures, including an expansion of its asset purchasing program beyond just Treasurys and mortgage-backed securities to include municipal bonds to avert a potential liquidity squeeze. The New York Federal Reserve, meanwhile, said it would conduct $1 trillion in overnight repo operations each day for the rest of the month to steady short-term lending markets.