Stocks closed with steep losses Wednesday as surging coronavirus cases in the U.S. and abroad dampen the global economic outlook.
The Dow Jones Industrial Average fell more than 700 points Wednesday, closing with a loss of 2.7 percent. The S&P 500 index fell 2.6 percent and the Nasdaq composite fell 2.2 percent.
All three indexes opened with losses of more than 2 percent Wednesday as Texas, Florida, Arizona and several other states continued to report record-breaking coronavirus cases and hospitalizations.
“The market is likely to remain headline-sensitive for a while, partly because corporate news is kind of light ahead of earnings. That means concerns about rising virus caseloads can often dominate the proceedings, which we’re seeing this morning,” said JJ Kinahan, chief market strategist at TD Ameritrade, in a Wednesday research note.
“It’s not too surprising to see a little backtracking as negative headlines appear,” he added.
The daily number of new COVID-19 cases in the U.S. is the highest it has been since April as several states around the country experience spikes in cases, according to data released by Johns Hopkins University on Wednesday. Houston, the third-largest U.S. city, is also experiencing an explosion of COVID-19 cases that could overwhelm local intensive care units by the end of the week.
The spike in COVID-19 cases in the U.S. and several developing or emerging market nations prompted the International Monetary Fund (IMF) to slash its forecast for global growth from its April projections.
The IMF now expects global economic gross domestic product (GDP) to fall 4.9 percent in 2020, 1.9 percentage points higher than the 3-percent decline the international lender projected in April.
While the IMF expects global GDP growth to rebound to 5.4 percent next year, that rate is still 6.5 percentage points below the growth level projected by the IMF in January.