Pessimism infected markets Thursday as investors digested the sobering economic forecast of U.S. Fed Chair Jerome Powell made late the day before. Powell warned of a “long road” to recovery for the U.S. but vowed to keep interest rates near zero through 2022 and would support the economy “for as long as it takes.”
Meanwhile, cases of Covid-19 ticked up in Florida and California though the national rise of 1.1% matches the seven-day average. Washington dismissed the need to shut down the country again if the numbers continue to increase. Meanwhile, the U.S. continues to reopen, including former hot spot, New York City.
The major Wall Street indices plunged 5-7% across the board with cyclicals and value stocks bearing the brunt. Airlines, which had soared 80% in the past three weeks, nosedived with American Airlines falling 15.51%. Other travel names like Carnival also fell 15%. Canada fared a little better. The TSX closed -4.14%. Energy names lost nearly 10% while financials sold off 4.44%. CNQ shed 10.68% while TD lost 4.42%. There was a sliver of good news: Moderna, one of 10 companies testing Covid-19 vaccines on humans, announced it will administer its candidate on 30,000 people infected with the virus in the third and final phase of testing in July. Moderna stock rose 0.22%.