NEW YORK (Reuters) - Wall Street indexes nosedived on Thursday, on track for their worst days since early in the coronavirus pandemic as investors reassessed a stocks resurgence after the Fed issued a gloomy growth forecast and infections showed signs of upswing.
The Dow Jones Industrial Average .DJI and S&P 500 .SPX were on track for their biggest daily percent slides since March 18. The Dow was down 5.64%, the S&P down 4.85%, while the Nasdaq Composite, which set its third record high close in a row on Wednesday .IXIC was off 3.98%, which would be it's steepest slide since April 1, if it holds.
ANDREW BRENNER, HEAD OF INTERNATIONAL FIXED INCOME, NATALLIANCE
“Equities markets are getting annihilated. A lot of this happens around big time events like Fed meeting. This Fed meeting was particularly important because the Fed had to try and navigate a narrow line. They didn’t want to say the numbers are getting better and ‘we don’t have to do as much’ and ‘we’re going to move slower.’ So the Fed said they were all in but then went on to justify why they’re all in making the outlook sound so gloomy… Even though they didn’t talk about yield curve capping, they ended up doing that – they capped the two-year, they capped the three-year, they capped the five-year… Powell came across as too negative.”
STEPHEN MASSOCCA, SENIOR VICE PRESIDENT, WEDBUSH SECURITIES, SAN FRANCISCO
“One concern is somewhat increasing coronavirus numbers. There’s been some increase and there’s concern it could drive further economic closings, although I find that very hard to believe.”
“I think there’s concern about the resurgence of Joe Biden and the resurgent Democratic Party. The stock market does not view that as good news.”
“We’ve had a tremendous rally, and it’s only natural to see some kind of pullback. There have been voices saying the market was ahead of itself and it moved too quickly…We were susceptible because of the sharp move in the market.”
JOHN DOYLE, VICE PRESIDENT OF TRADING AND DEALING AT TEMPUS INC., WASHINGTON
“This historic gain in equities is getting a reality check. There are some concerns about re-infections, but my thought is that today is not so much different from the beginning of the week. But perhaps because of how fast and how hard equities have gone up, traders are looking for an excuse to take profits and take them off their highs.”
DAVID KOTOK, CHAIRMAN & CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS, FLORIDA
“Everything changed with COVID fear. It provides nerve-wracking violent moves which can induce more fear or provide trading opportunities depending on the investor and their capability and discipline. I haven’t deployed any cash in this selloff yet. That could change at any time. I raised cash into the rally. At this point I wish I’d raised more. I sold stocks and raised cash.
“It is a combination of unknown economics and a very sobering and accurate assessment by the Fed and Powell and a fear of a second wave, which is a realistic and genuine fear.
“Do we have a 5-8pct correction within a bull market that started with the bottom on March 23? Yes (we) might. Does the decline get more serious? It might. I don’t think I can guess which it is. That’s why I haven’t committed any cash. I don’t want to catch a falling knife.”
ANTHONY VALERI, DIRECTOR OF INVESTMENT MANAGEMENT, ZIONS BANCORPORATION, SAN DIEGO
“It’s a culmination of events. The market has been up so much from March, up 43% at one point, history shows that when you have that kind of steady move up you’re ripe for some kind of consolidation. Yesterday after Powell began to speak his tone was really downbeat, he really stressed that we have a long way to go to repair the jobs market. So that injected a note of reality. (That) was reiterated this morning with the jobs numbers. Then there are fears of a second wave of the virus. On balance that is the least important (factor) but it alerted people to the situation.”
MATT MISKIN, CO-CHIEF INVESTMENT STRATEGIST, JOHN HANCOCK INVESTMENTS
“Risk assets had run too far too fast in our view pricing in a very optimistic and speedy economic recovery. The Fed gave the markets a reality check yesterday forecasting economic growth to not return to pre-COVID-19 levels until the end of 2021.”
MARC CHANDLER, CHIEF MARKET STRATEGIST AT BANNOCKBURN GLOBAL FOREX, NEW YORK
“A lot of people are putting this at the feet of the Fed, but I don’t buy it. …. Since about the middle of May there has been this liquidity driven surge in risk assets and I think that rather than the Fed making investors rethink, it confirmed what we know. I think today is a big ‘buy the rumor sell the fact’.”
Compiled by Alden Bentley