The US equity market finished lower for second straight session on Wednesday, 13 May 2020, as risk-off selloff triggered amid downbeat near-term economic outlook from Federal Reserve Chairman Jerome Powell. Meanwhile, concerns over a second wave of coronavirus cases and the threat of trade conflict with China also weighed down sentiments. At closing bell, the Dow Jones Industrial Average stumbled 516.67 points, or 2.2%, to 23,247.97. The S&P 500 - a gauge of US retirement and education savings accounts - dropped 50.12 points, or 1.8%, to 2,820. The tech-heavy Nasdaq Composite Index sank 139.38 points, or 1.6%, to 8,863.17.
The risk-off sentiment crept into markets as investors worried about the impact of the coronavirus on the U. S. economy after Fed chair Jerome Powell warned the economic outlook was "highly uncertain and subject to significant downside risks " and said Washington may need to spend beyond the nearly US$3 trillion already approved by Congress.
Powell's comments came one day after top US scientist Anthony Fauci cautioned that ending the coronavirus shutdowns and reopening the economy too quickly would compromise public health.
Traders remain worried about the possibility of Covid-19 cases rising again as governments ease their restrictions in relation to the lockdowns,
Sentiment was also dented after lawmakers in Washington on Tuesday proposed giving the president powers to impose fresh sanctions if Beijing does not give a "full accounting" of the coronavirus outbreak.
ECONOMIC NEWS: US Producer Prices Tumble In April-- The Labor Department released a report on Wednesday showing US producer prices plunged by much more than expected in the month of April.
The Labor Department said its producer price index for final demand tumbled by 1.3% in April after edging down by 0.2% in March. The steep drop by the producer price index for final demand reflected the largest decrease since the index began in December 2009. The bigger than expected decrease in producer prices came as energy prices nosedived by 19.0 in April after plummeting by 6.7% in March. Food prices also decreased during the month, falling by 0.5% in April after coming in unchanged in the previous month. Excluding food and energy prices, core producer prices fell by 0.3% in April after inching up by 0.2% in March. Core prices were expected to be unchanged. The drop in core prices came as prices for goods excluding food and energy slid by 0.4%, while prices for services dipped by 0.2%.
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