Recession worries drive down stocks again
Coronavirus fear strikes back after a day of gains
San José, CA – On Thursday, March 5, the day after U.S. stocks soared on hopes that a Biden presidency would be better for Wall Street, economic worries about the new Coronavirus (COVID-19) drove down stocks again. The Dow Jones Industrial Average fell almost 1000 points, or 3.5%, with other averages falling a bit less. Interest rates on the ten-year U.S. Treasury Bonds fell to another record low of less than 0.92%, showing both fear among U.S. investors and expectations of weaker economic growth.
Hardest hit were travel-related companies on the news that United Airlines was cutting their flight schedule and offering unpaid furloughs for their workers. A regional airline in Europe collapsed, threatening its workers’ jobs. A smaller Japanese cruise line company also entered bankruptcy as cruise ship bookings continued to plummet with the news that another Carnival cruise ship was returning to San Francisco after a former passenger died of the coronavirus and a number of passengers fell ill.
Apple computer reported shortages of replacement parts and older replacement phones as the tech industry’s production in China and south Korea took major hits. Oil tankers are now floating at sea as demand for oil drops, especially in China, which is the world’s largest oil importer. Oil prices have dropped more than 25% since the beginning of the year, promising more pain to oil-exporting countries.
Auto sales are down in double digits in south Korea, the country with the second-most corona virus infections and whose new infections, along with Italy and Iran, and now greater than China. Car sales in February fell 80% from a year ago as China’s stiff quarantine measures have cut into retails sales – although reports say that there was an increase at the end of February. While China’s economy has taken a hit, the socialist government’s firm response has cut the rate of new infections below 150 a day, far less than the rest of the world which saw more than ten times as many – more than 2000 in the last World Health Organization or WHO report.