Stocks sank sharply Thursday amid concerns over rising coronavirus cases in several states that had loosened social-distancing restrictions and another stark warning from Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average opened with a loss of more than 900 points, falling 3.4 percent after futures trading predicted a drop of more than 800 points. The S&P 500 index fell 2.7 percent and the Nasdaq composite sank 2.3 percent.
Thursday’s drop comes as a resurgence of coronavirus cases in states across the country derails months of building optimism and rising stocks following the gradual reopening of some of the U.S. economy. The number of people hospitalized in Texas has grown 42 percent since Memorial Day, Arizona’s top health official has urged hospitals to activate their emergency plans, and North Carolina, California, Mississippi and Arkansas are all reporting record levels of hospitalizations.
Stocks have risen steadily since April despite catastrophic job losses, more than 110,000 U.S COVID-19 deaths, and a highly uncertain road to recovery. While the U.S. added 2.5 million jobs in May, stunning economists who expected additional months of losses, the country has recovered less than 10 percent of the more than 21 million jobs lost to the pandemic.
Powell said Wednesday that the Federal Reserve will continue to flood the economy with cheap money and emergency lending until the U.S. has finally turned the corner, but warned against reading too much into May’s job reversal.
“You could see significant job growth in coming months as people return to their jobs, but you’re still going to face, probably, an extended period where it will be difficult for many people to find work,” Powell said.