US stocks dive amid dire government warnings about spread of deadly pandemic

Wall Street opened lower on Wednesday after US President Donald Trump prepared Americans for a surge in coronavirus infections in the country with a death toll that could reach 240,000.

The Dow Jones Industrial Average dropped over 600 points after the opening bell. The S&P was trading over three percent lower, while the Nasdaq Composite is down over two percent.

The markets are digesting dire warnings from the White House that deaths from Covid-19 over the next two weeks are projected to reach between 100,000 and 240,000, with coronavirus fatalities peaking over this period.

“This could be a hell of a bad two weeks. This is going to be a very bad two, and maybe three weeks. This is going to be three weeks like we’ve never seen before,” Trump said on Tuesday.

Global stocks fell on Wednesday amid warnings that the world's largest economy, the United States, is quickly becoming the epicenter of the pandemic. 

In Asia the losses were led by Japan’s Nikkei 225 which nosedived 4.5 percent as statistics showed a widespread slowdown in manufacturing across the region. European markets followed suit with German and French indices diving more than three percent. Britain’s FTSE 100 dipped around four percent.

Stock markets are reacting to “a likely increase in the duration and breadth of coronavirus lockdowns in the US and elsewhere, which is pointing to a potentially deeper and longer-term hit to economic activity than was anticipated even a week ago,” Stephen Innes, a strategist at AxiCorp, wrote in a research note seen by CNN.

This week, Goldman Sachs significantly downgraded its outlook for the US economy between April and June. The investment bank now expects an annualized rate of contraction of 34 percent compared to the previous quarter. Its last estimate was an already-shocking 24 percent. Goldman has also revised the US unemployment rate, projecting it to rise to 15 percent by the middle of the year, compared to nine percent earlier.

US Treasury Secretary Steven Mnuchin told CNBC on Wednesday that discussions are going on with congressional lawmakers about a potential infrastructure bill aimed at boosting the US economy as it struggles to cope with the fallout from the coronavirus outbreak.

Trump said earlier another $2 trillion stimulus package may be necessary to support the US economy. The US president has already signed the largest-ever $2 trillion stimulus package in order to keep the American economy running.

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