The Dow Jones Industrial Average took a tumble Wednesday, falling 3% as global increases in the coronavirus infection rate cause pause for the world economy. The U.S. was in line with Europe, where Germany, France and United Kingdom index levels dropped.
The German Dax has not been this low since May and the country has imposed a four-week partial lockdown. That also is returning in the U.S., where Chicago shut down indoor dining in reaction to the spike in COVID-19 cases. “I think there’s going to be a call for lockdowns the likes of which we’ve seen in Chicago,” CNBC’s Jim Cramer said on Wednesday. “The lockdowns without the stimulus equals what we’re seeing.
“It’s a shame because, had there been stimulus, we’d then be focusing on earnings and the earnings are actually pretty darn good.”
Johns Hopkins University data reported 71,832 new cases Tuesday, setting a record high for the third consecutive day. The seven-day average is about 21% higher than the previous week. Almost half of the new 2.8 million coronavirus cases in the world last week were attributed to the European region that includes Russia, Turkey, Israel and Central Asia, according to the World Health Organization.
While travel stocks continued declines, investors shifted to bonds for safety. “We believe investors should seek to put further COVID-19-related restrictions in perspective and see market setbacks as an opportunity to build exposure in the winners from the next leg up,” wrote Mark Haefele, chief investment officer for global wealth management at UBS, in a note.
Pessimism. Optimism. The pendulum keeps swinging.