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Wall Street sinks 6% after the rebound of the coronavirus in the United States

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Wall street It has registered very strong falls that range between 5% and 7% due to the outbreak of coronavirus in the United States, especially in Texas, California and Florida, which have registered an increase in infections after reopening their economies. The Nasdaq (-5.2%) closed this Wednesday at all-time highs above 10,000 points, although the S&P 500 (-5.9%) and the Dow Jones (-6.8 &) fell moderately. The latter closed its worst day since mid-March on Thursday. It is also necessary to highlight that the three indices had rebounded until today more than 40% since the March lows.

Within the business front, the strong correction of the values ​​most exposed to the pandemic, such as: airlines, cruise companies and hotels. In the Dow Jones, very relevant falls for Boeing, IBM and Caterpillar.

Although the 'escabechina' has occurred in all sectors. The KBW Banks Index down 8%, while the Philadelphia Semiconductor Index falls 5% and the S&P Energy Index yields 7%.

Given this widespread 'sell off', the VIX Volatility Index shoots up 57%, up to 42 points, reflecting the sudden rebound in risk aversion by investors.

Investors' worst nightmare comes true with the news of a second wave of contagion hitting the US. Florida has reported the highest number of new cases in a week and Texas has reported for three consecutive days a record hospitalizations.

In addition, nine counties of California they have reported an increase in new cases and more hospitalizations of confirmed cases. According to data from Johns Hopkins University, infections have exceeded 2 millions across the country and deaths have risen above 113,000.

"I am skeptical in calling the current peak in coronavirus cases in the US a second wave, because the situation was never under control in the rest of the country"says Naeem Aslam, an analyst at Ava Trade.

FEDERAL RESERVE FORECASTS

The forecast by the Federal Reserve not to raise rates until the end of 2022 and continuing to buy $ 120 billion worth of assets for as long as needed has not served to reassure investors, who reap benefits as volatility increases.

"I see a full long-term recovery, with strong job creation in the coming months, not an economic depression"said Jerome Powell at a press conference, despite the difficulty of making forecasts.

The Fed forecast a GDP fall of 6.5% in 2020 and a rebound of 5.5% in 2020. The unemployment rate will drop to 9.3% at the end of the year and will continue to drop to 6.5% in 2021. And the inflation PCE It will drop to 0.8% this year to rebound to 1.6% in 2021 and to 1.7% in 2022.

However, the fact that the Fed did not anticipate a recovery in 'V' as the markets have done in the past three months, it has been enough to trigger a sharp correction in US equities.

In macro matter, this Thursday the weekly unemployment claims have been known, They have dropped to 1.52 million in the last week, a figure that has been in line with expectations but is still very high.

In other markets, the West Texas oil falls sharply 8% to $ 36.46. Besides, the ounce of gold up 1.3% to $ 1,744, while the euro it appreciates 0.02% and changes to $ 1.1371. Finally, the profitability of 10-year American bond falls to 0.66%.

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