Here’s what you need to know:
- Stocks tumble as the Fed chair warns of a prolonged downturn.
- Mnuchin tells borrowers who took small loans that they are in the clear.
- America’s job losses might be slowing.
- J.C. Penney could file for bankruptcy as soon as Friday.
- Southwest tries to entice travelers with a flight sale.
Stocks tumble as the Fed chair warns of a prolonged downturn.
Stocks slid on Wednesday, Wall Street’s second drop in two days, after the Federal Reserve chair warned of dire consequences if lawmakers don’t do enough to protect the economy.
Saying the downturn is “without modern precedent,” Jerome H. Powell, the Fed chief, said that while the central bank has made efforts to limit the economic shock caused by coronavirus-related shutdowns, more financial support might be required from Washington to prevent lasting damage.
Mr. Powell’s comments came as Democrats and Republicans argued about the merits of a new spending plan. On Tuesday, House Democrats unveiled a $3 trillion relief measure that Republicans dismissed as exorbitantly priced and overreaching.
The warning — which echoes those of other economists who have said that the government’s relief efforts to date have barely sustained individuals and companies — set the tone for the trading day on Wall Street. The S&P 500 fell nearly 2 percent, adding to its 2 percent loss from the day before.
Investors have shrugged off a number of risks to the economy in recent weeks, instead bidding up stocks ever since the Fed signaled that it was ready to purchase unlimited bonds to stabilize key financial markets and President Trump signed a $2 trillion economic rescue package.
That rally, a nearly 30 percent gain in the S&P 500 in March, has lifted stock prices even as company fundamentals worsened, and came despite a darkening outlook for growth.
Mr. Powell seemed to focus investors on the risks again, a day after they heard a different concern from Dr. Anthony S. Fauci, a central figure in the U.S. government’s coronavirus response. If economic interests were allowed to override public health concerns, Dr. Fauci warned, “there is a real risk that you will trigger an outbreak that you may not be able to control.”
And some influential investors have weighed-in on the growing disconnect between the performance of the stock market and an ugly outlook for the American economy. On Wednesday, David Tepper, a long time hedge fund manager, said on CNBC that he thought the market was the most overvalued it has been since 1999.