People wait to get into a store in Washington on Wednesday. As of April 1, the entire capital region is under ‘stay-at-home’ orders. Agence France-Presse

Agencies

US stocks joined a worldwide downdraft on Wednesday as more signs piled up of the economic and physical pain being caused by the coronavirus outbreak.

The S&P 500 dropped close to 3% in midday trading after President Donald Trump warned Americans to brace for “one of the roughest two or three weeks we’ve ever had in our country.” The White House is projecting that 100,000 to 240,000 people in the US could die from COVID-19. Long-term Treasury yields sank as investors moved into safer investments.

Japanese stocks took some of the world’s heaviest losses after a survey of business sentiment there fell to its worst result in seven years. The Nikkei 225 dropped 4.5%. Britain’s FTSE 100 was down 3% after big banks there scrapped dividend payments, part of a worldwide effort by companies and households alike to conserve cash. Germany’s DAX lost 3.5%.

Stocks worldwide have tumbled this year as the coronavirus pandemic forces economies into what is expected to be a steep, sudden recession. The S&P 500 just closed out its worst quarter since 2008 with a 20% loss.

Businesses are shutting down, and people are staying at home in hopes of slowing the spread of the virus. It’s the economic equivalent of putting a patient in a medically induced coma, said Anwiti Bahuguna, head of multi asset strategy at Columbia Threadneedle Investments: “a calculated, temporary risk with the goal of establishing greater longer-term health.” The problem for investors is that no one knows how long the coma will last and how severe the damage will be during it.

A report on Wednesday said that private US employers cut 27,000 jobs last month, which was actually much milder than the 200,000 that economists were expecting. The survey from payroll processor ADP used data from the week ending March 14, which was before the number of people seeking unemployment benefits exploded to a record. Economists continue to expect Friday’s more comprehensive jobs report from the government to be dismal.

Another report showed that US manufacturing activity contracted in March, reversing after two months of slight growth. The reading, though, was not as bad as economists expected. The Institute for Supply Management already warned of trouble for factories in February with the virus disrupting Asia supply chains, and as the pandemic struck the United States in recent weeks, the ISM manufacturing index declined to 49.1 per cent in March.

That was better than expected but still below 50 per cent, indicating the sector was contracting, and worse is expected in coming weeks.

Manufacturing represents a small but symbolically important share of the world’s largest economy, but the sector struggled throughout 2019 due to President Donald Trump’s multi-front trade war, particularly the damaging confrontation with China.

The number of infections keeps rising, which worsens the uncertainty. The United States has more than 189,000 cases, according to a tally by Johns Hopkins University. That leads the world, which has more than 877,000 confirmed cases.

For most people, the coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.

More than 43,000 people have died from the virus, while more than 185,000 have recovered.

Stocks had cut some of their severe losses in recent weeks as Washington swooped in with aid for the economy and markets.

The S&P 500 jumped nearly 18% in just three days last week as Congress struck a deal on a $2.2 trillion rescue package for the economy and the Federal Reserve promised to buy as many Treasurys as it takes to get lending markets running smoothly.

House Democrats are already collecting ideas for a possible fourth round of aid for the economy, including extended unemployment benefits and spending on infrastructure. President Donald Trump has tweeted his support for a $2 trillion infrastructure package, but top Republicans in Congress say they first want to see how well their just-approved programs do.

The S&P 500 was down 2.9%, as of 11am. All 11 sectors that make up the index lower. Among the few gainers were Kroger, Dollar General, Walmart and other companies selling day-to-day essentials that households are stocking up on to ride through stay-at-home orders.

On the losing end was Macy’s, whose 2.1% drop Wednesday brought its loss for 2020 so far to nearly 72%. So much of the company’s market value has vanished that it’s getting removed from the S&P 500 index of big US companies. S&P Dow Jones Indices is skipping its index of medium-sized stocks and placing Macy’s into its index of small stocks, the S&P 600, effective on Monday.

The Dow Jones Industrial Average lost 517 points, or 2.4%, to 21,399, and the Nasdaq dropped 2.2%.

The yield on the 10-year Treasury dropped to 0.58% from 0.70% late Tuesday. A bond’s yield drops when its price rises, and investors buy long-term Treasurys when they’re fearful because they see US government bonds as having virtually no risk of default Benchmark US crude oil held relatively steady slightly above $20 per barrel, after it dropped by roughly two thirds in the first three months of the year.