Stocks slide as Powell says Fed fighting worst slump since WWII

NEW YORK - U.S. stock markets tumbled Wednesday after Federal Reserve Chairman Jerome Powell said the central bank will take further steps to combat the worst downturn since World War II and debate raged over whether states are scaling back coronavirus lockdowns too quickly.

The Dow Jones Industrial Average dropped 642 points, or 2.7 percent, while the S&P 500 dipped 2.52 percent and the Nasdaq Composite fell 2.49 percent.

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Powell said the Fed will use the tools at its disposal "to the fullest" until the crisis has passed and recovery is “well underway" for the economy. Attempting to prevent lasting damage from a prolonged recession that would hurt productive capacity is vital, he said.

"Economic forecasts are uncertain in the best of times, and today the virus raises a new set of questions," Powell added. "How quickly and sustainably will it be brought under control? Can new outbreaks be avoided as social-distancing measures lapse?"

As localities around the nation make varying decisions on how quickly to move out of shutdown mode, Arizona has decided to allow pools, gyms and fitness centers to reopen with social-distancing guidelines in place. Meanwhile, Los Angeles County said stay-at-home orders will likely remain in place for the next three months.

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Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, and other members of the coronavirus task force testified before a Senate committee on Tuesday, warning of the risks of states not following guidelines and reopening too quickly.

Looking at stocks, GrubHub rejected Uber’s $6.25 billion all-stock takeover attempt that would have paid investors in the food-delivery service about 2.15 Uber shares for every share of GrubHub they owned, according to CNBC.

Las Vegas Sands ended its plans for a $10 billion casino project in Japan. Rivals Caesars Entertainment and Wynn Resorts previously suspended their pursuits of Japanese casinos.

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Streaming company Roku announced plans for the sale of up to 4 million common shares over time.

Embattled retailer J.C. Penney is in talks for a $450 million loan ahead of a bankruptcy filing that is expected to come as soon as Friday, CNBC said.

On the earnings front, cybersecurity firm CyberArk Software beat Wall Street estimates for both earnings and revenue, but predicted second-quarter sales and operating income below expectations.

West Texas Intermediate crude oil fell 1.42 percent to $25.42 a barrel after weekly data showed U.S. inventories fell for the first time in 16 weeks. Meanwhile, gold advanced 0.79 percent to $1,720 an ounce.

U.S. Treasurys ticked higher, pushing the yield on the 10-year note down by 4.1 basis points to 0.651 percent.

European markets were lower across the board, with France’s CAC down 2.32 percent, Germany’s DAX sliding 1.92 percent and Britain’s FTSE off 1.13 percent after government data showed the U.K. economy shrank by a record 5.8 percent in March.

In Asia, Japan’s Nikkei fell 0.49 percent and Hong Kong's Hang Seng slipped 0.27 percent while China’s Shanghai Composite added 0.23 percent.

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