Wall Street slumps after somber Fed outlook

Wall Street slumps after somber Fed outlook

Wall Street's three major indexes closed lower for the second day in a row after Federal Reserve Chairman Jerome Powell warned on Wednesday of extended economic weakness due to the coronavirus pandemic and called for Congress to agree on additional fiscal support.

Conway G.

Gittens has the market action.

Sometimes what the market wants - it doesn't get - and investors throw a tantrum.

Stocks tumbled roughly 2 percent Wednesday after Federal Reserve Chairman Jerome Powell failed to offer concrete details on any new stimulus from the central bank, instead he called on Congress to boost fiscal spending.

Investors were further un-nerved by the Fed chief's grim outlook for the economy.

He said – in a webcast - that any recovery is likely to be slow.

SOUNDBITE (ENGLISH): FEDERAL RESERVE CHAIRMAN JEROME POWELL, SAYING: "The coronavirus crisis raises longer term concerns.

The record shows deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy." The Dow fell for the third straight day - tumbling more than 500 points.

The S&P 500 lost 50 points and the Nasdaq shed 139 points.

For Ross Gerber, CEO of Gerber Kawasaki, Powell's pessimistic tone was a sign the market has rallied too much from the plunge it took in March.

"Earnings are expected to go down 20 percent this year and if that's the case the market should go down 20 percent this year.

It's down about 11 or 12 percent, so in my mind we could see another 10 to 15 percent downside in the market before we really start to move up again.

So we are playing it very defensively.

We highly recommend investors be conservative." Banks were one of the hardest hit sectors in Wednesday's sell-off.

Investors fear a slip in interest rates mean the industry will continue to struggle to find revenue growth.

Wells Fargo got slammed - falling 6-1/2 percent.

Bank of America was down more than 4 percent.

Another sector knocked lower?

Airlines.

With airline travel not expected to return to pre-pandemic levels anytime soon and the industry giving mixed messages when it comes to passengers wearing face masks, according to policies seen by Reuters, airlines sunk to new lows.

United lost nearly 9 percent.

Delta gave up almost 8 percent.

American Airlines shed 6 percent.