Wall Street's three major indexes fell more than 4 per cent on Wednesday, after President Donald Trump's dire warning on the US death toll from the coronavirus sent investors running from even the most defensive equities.
Trump has warned Americans of a "painful" two weeks ahead, and health officials highlighted research predictions of an enormous jump in virus-related deaths.
Economic data did little to lift the mood. While US manufacturing activity contracted less than expected in March, new orders received to factories fell to an 11-year low.
And business closures pushed private payrolls down by 27,000 jobs last month, the first decline since September 2017, according to the ADP National Employment Report.
But money managers mostly focused on Trump's comments and those of New York Governor Andrew Cuomo, a state badly hit by the virus.
"With comments from President Trump and Cuomo suggesting this is going to get worse before it gets better, investors are coming to the realisation the virus will be with us for longer than they would have expected," said Chris Zaccarelli, Chief Investment Officer, Independent Advisor Alliance, Charlotte, NC.
"Because of that the bear market is going to last longer," he said. "The longer people stay home the longer it takes for the economy to restart and the longer it takes for corporate earnings to come back."
The Dow Jones Industrial Average fell 973.65 points, or 4.44 per cent, to 20,943.51, the S&P 500 lost 114.09 points, or 4.41 per cent, to 2,470.5 and the Nasdaq Composite dropped 339.52 points, or 4.41 per cent, to 7,360.58.
Even sectors generally seen as the safer bets because of high dividends saw a stampede to the exits. Real estate and utilities each declined 6 per cent, making them the leading percentage losers among the S&P's 11 major sectors.
Virus worries also heightened nerves over the upcoming earnings season which starts in roughly two weeks. Some companies have withdrawn their financial guidance.
"We don't know all the economic and earnings impact yet and this is a sober thought for Americans with those projections of the death rate," said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio.
S&P 500 firms are expected to enter an earnings recession in 2020, falling 4.3 per cent in the first quarter and 10.9 per cent in the second, according to the latest estimates gathered by Refinitiv.
Consumer staples, down 1.8 per cent, fared the best of the S&P's sectors as many consumers have been stockpiling goods due to government directives to stay at home.
Shares of airlines and cruise operators were among the S&P's biggest laggards, with United Airlines down 18.7 per cent and Carnival Corp plunging 33 per cent.
Declining issues outnumbered advancing ones on the NYSE by a 9.47-to-1 ratio; on Nasdaq, a 7.15-to-1 ratio favoured decliners.
The S&P 500 posted 1 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 7 new highs and 91 new lows.
On US exchanges 12.29 billion shares changed hands compared with the 15.81 billion average for the last 20 sessions.
Australian Associated Press
