CNN/Clare Duffy, Laura He, Jill Disis and Anneken Tappe

Dow dives as coronavirus resurgence fears grow in the US and China

“Volatility has returned to the stock market, as the United States and China grapple with new coronavirus outbreaks. It’s a sign that the pandemic isn’t done wreaking havoc on the global economy.

US stocks tumbled at the opening bell in New York, with the Dow (INDU) falling 2.6%, or 660 points. Trading was volatile in the first minutes: The Dow briefly bounced back and then fell more than 700 points, or 2.8%.

The S&P 500 (SPX) and Nasdaq Composite (COMP) both also dropped sharply at the open, and traded down 2.3% and 1.7%, respectively, in the first minutes of the session.

Oil prices moved lower, also pushed down by concerns about a resurgence of the virus that could lead to lower demand. US oil prices tumbled more than 4% to $34.75 a barrel. Brent, the global oil benchmark, slipped 2.5% to $37.75 per barrel.”

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CNBC/Fred Imbert and Yun Li

Dow drops more than 600 points as Wall Street adds to last week’s sharp losses, airlines fall

recovery reversal“The Dow Jones Industrial Average fell 608 points at the open, or 2.4%. The S&P 500 slid 1.9% while the Nasdaq Composite traded 1.4% lower.

Stocks which stand to benefit the most from a successful reopening led the losses. Carnival and Royal Caribbean cruise lines each lost more than 7%. United Airlines lost 7.9% and American Airlines slid 7.6%. Retailers Kohl’s and Gap declined. These types of stocks surged in May as investors bet that the worst of the virus was over.

“We’re in the midst of a correction,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The coronavirus is spiking up again and that’s a problem. There was also over-exuberance in the market. The market was discounting a quicker economic rebound.””

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Money Is Moving Out Of U.S.: The Debt Party Is Over

100 dollar bills“Foreign money that had been invested in the United States appears to be leaving the country as the extent and length of the economic downturn is now being realized.

The huge amount of debt that has been created over the past twenty years, combined with the debt now being issued, is creating a huge burden that must be satisfied.

Federal Reserve actions will help meeting the liquidity needs of financial markets but are not expected to create the economic growth needed to cover the debt burden.

In only three of the last 20 years has the United States experienced foreign investors being net sellers of US Treasury securities. The last his this happened was in 2016.

“Goldman Sachs expects foreign investors to be net sellers of US Treasuries this year,” writes Eva Szalay in the Financial Times.”

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KITCO/John Wyckoff

Gold, silver prices down, following global stock market sell-off

“Gold and silver prices are solidly lower in early U.S. trading Monday. On this day traders appear more focused on the bearish prospects of reduced consumer demand for precious metals due to hobbled economies, than on their safe-haven aspects. August gold futures were last down $22.70 an ounce at $1,714.50. July Comex silver prices were last down $0.297 at $17.185 an ounce.

Global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Traders and investors are risk averse to start the work week, as there are growing signs that the Covid-19 pandemic is making a resurgence. Reports said parts of Beijing are on lockdown again, with cases in some U.S. states also on the rise as businesses reopen and American citizens become more lax on social distancing. Reported cases in the U.S. have now risen above 2 million.

There are also growing notions that the global stock market rebounds have come too far, too fast, given the actual economic conditions in the major industrialized countries at present. The general and even many in the investing public are asking, “How could the Nasdaq stock index hit a record high last week when U.S. unemployment has surged to around 15% and much of the economy remains crippled?””

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