Dow’s 800-Point Crash Spares No One as IMF Unleashes Grim Warning

The Dow and broader U.S. stock market are in freefall Wednesday, as investors react to a slew of negative headlines from politics to the economy.
  • The Dow Jones Industrial Average plunged by as much as 843 points Wednesday.
  • The losses follow a highly volatile pre-market session as investors reacted to President Trump’s shockingly low re-election odds as per the New York Times.
  • All 30 of the Dow’s blue-chip companies record losses, with Boeing leading the declines.

The Dow and broader U.S. stock market underwent another wave of selling on Wednesday, as investors reacted to a grim forecast about the global economy. President Trump’s re-election odds are also in focus after a New York Times poll put Joe Biden lightyears ahead of the incumbent.

Dow 30 Plunge; S&P 500, Nasdaq Follow

All of Wall Street’s major indexes printed heavy losses Wednesday, reflecting a volatile pre-market for Dow futures.

The Dow Jones Industrial Average plunged by as much as 843 points. Year-to-date, the blue-chip index is down over 11%.

The Dow Jones Industrial Average is down more than 800 points. | Chart: Yahoo Finance

All 30 Dow index members recorded losses, with Boeing (NYSE:BA) leading the declines. Raytheon Technologies (NYSE:RTX), ExxonMobil (NYSE:XOM), and Dow (NYSE:DOW) also declined sharply.

The Dow’s losses were widespread on Wednesday. | Source: Twitter

The broad S&P 500 Index of large-cap stocks plunged 2.9%, with all 11 primary sectors recording declines. Energy shouldered the most substantial losses; as a sector, it fell 5.8%. Financials, industrials, and healthcare companies also posted significant declines.

Meanwhile, the technology-focused Nasdaq Composite Index declined by 2.6%.

Volatility Rises

The CBOE Volatility Index, commonly known as the VIX, spiked 14.1% to 35.80. Anything above 20 represents higher than usual volatility.

Typically, the CBOE VIX moves in the opposite direction of stocks. When the VIX rises, stocks fall, and vice-versa.

Volatility approached record highs in March as stocks plunged into a bear market. Although the gauge is still higher than average, it’s much lower than where it was a few months ago.

IMF Downgrades Global Economic Outlook

Losses were magnified by a damning report on the global economy from the International Monetary Fund (IMF). The  lending institution has downgraded its outlook on global economic growth, referring to the pandemic as a “crisis like no other.”

The IMF’s revised forecast shows global GDP contracting 4.9% in 2020. In April, the Fund projected a 3% contraction.

For the global economy, 2020 is looking as bleak as they come. | Image: IMF

The U.S. economy is forecast to fall 8% this year, while Eurozone GDP is expected to contract 10.2%. China’s economic growth is pegged at a modest 1% this year as India, Latin America, and developing Europe all contract.

A sudden resurgence in virus hot spots across the United States has cast doubts about the likelihood of a quick recovery. Brazil, Russia, and India have also become epicenters of the novel disease.

Low-income households are more prone to economic hardship due to the pandemic.

According to the IMF:

The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

Josiah Wilmoth edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Last modified: June 25, 2020 4:27 PM UTC

Published:
June 24, 2020 3:46 PM UTC
Posted in: Markets
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Sam Bourgi @forgeforth87

Financial Editor of CCN.com, Sam Bourgi has spent the past decade focused on economics, markets, and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE, Yahoo Finance, and Forbes. Sam is based in Ontario, Canada and can be contacted at sam.bourgi@ccn.com or at LinkedIn. Visit his Muck Rack profile here.