Highlights

Wall Street plunges 4.1pct despite stimulus package

 Publish date: Sat, 28 Mar 2020, 11:34 AM

NEW YORK: Wall Street stocks sank on Friday, plunging after three positive sessions despite the US House of Representatives approving a US$2 trillion package to address the Covid-19 coronavirus crisis.

The Dow Jones Industrial Average sank 4.1 per cent, or 915 points, to 21,636.78.

The broad-based S&P 500 dropped 3.4 per cent to 2,541.47, while the tech-rich Nasdaq Composite Index tumbled 3.8 per cent to 7,502.38.

Despite Friday's rout, all three indices finished the week with solid gains as the giant stimulus moved through Washington towards the desk of the president, with the Dow experiencing its largest weekly gain since 1931.

The bill will pump US$100 billion into hospitals and health facilities in critical need of medical gear like personal protective equipment and ventilators, create a US$500 billion loan reserve for large corporations including airlines and provide US$377 billion in grants to suffering small businesses.

The legislation is a welcome reprieve, but economists warn of a tough road ahead.

"It is clear that we have entered a recession" that will be worse than the aftermath of the global financial crisis in 2009, said IMF chief Kristalina Georgieva.

US Treasury Secretary Steven Mnuchin on Friday pledged to quickly send out direct cash transfers, saying, "Americans need that money now."

But there remains doubt about whether that can happen in the three weeks he has set as the timeframe.

"The success of a massive stimulus package... will depend on how quickly the aid can get to beleaguered consumers and businesses - a huge challenge for federal and state agencies that aren't built to move quickly," said Art Hogan, chief market strategist at National Securities.

Hogan noted that the number of coronavirus cases in the United States is "exploding," and that economic data will be "horrendous" in the upcoming period. 


- AFP

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