Dow Falls 500 Points as Fed Warns More Stimulus Needed
Stocks ended sharply lower Wednesday as central bank officials warned more fiscal stimulus was needed to rescue a struggling U.S. economy.
The Dow Jones Industrial Average finished down 525 points, or 1.92%, to 26,763, the S&P 500 was off 2.37% and the Nasdaq fell 3.02%.
Amazon.com finished down 4.1%, and Alphabet declined 3.5%.
Federal Reserve Vice Chairman Richard Clarida, like Fed Chairman Jerome Powell before him, said the central bank believed “additional fiscal support will likely be needed” to lift the U.S. economy out of its coronavirus-related downturn.
Powell warned Tuesday in congressional testimony that a U.S. recovery from the coronavirus pandemic, which has killed more than 200,000 Americans, “continues to be highly uncertain.”
“The recovery will go faster if there’s support coming both from Congress and from the Fed,” Powell said.
Nike was the leading gainer on the Dow, rising 8.8%, after the sports apparel and equipment giant posted better-than-expected fiscal first-quarter earnings. Nike brand digital sales rose 82% overall in the quarter.
Johnson & Johnson was little changed at $144.43 after the healthcare giant said it started the final round of testing for its coronavirus vaccine candidate.
Johnson & Johnson said the single-shot dose, which will be tested on 60,000 trial participants, followed positive data from a Phase 2 trial.
The company reiterated its goal of producing and supplying more than 1 billion doses of the vaccine – should it be cleared by regulators – through the course of 2021. It aims to have a decision on the vaccine’s effectiveness either later this year or in the first months of 2021.
Tesla shares declined 10% to $380.36 after the electric-car maker’s battery presentation disappointed investors.
CEO Elon Musk outlined his company’s ambitious battery manufacturing and cost-reduction goals but detailed how long it might take for those goals to be reached.
Musk said the cheaper and more efficient batteries ultimately will let Tesla “make a compelling $25,000 car that is also fully autonomous.”
The new batteries, however, will take a while to ramp up. Tesla said the 4680 batteries won’t reach mass production until 2022. Tesla set goals of having 100 gigawatt-hours of annual production capacity by 2022, and 3 terawatt-hours of capacity by 2030.
Global stocks remain on course for their first monthly drop since March. Prior to Wednesday, the S&P 500 had declined 5.3% in September, while the Nasdaq had dropped nearly 7%.
Stock markets have traded lower the first three weeks of September on fears that rising coronavirus infections worldwide could lead to further lockdowns and a lack of another U.S. fiscal stimulus package.