New York Stock Market Plummets... Rebalancing Concerns Amid Renewed COVID Fear (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Baek Jong-min] The New York stock market showed a relatively sharp decline due to concerns over the spread of the novel coronavirus infection (COVID-19). There is also speculation about the possibility of rebalancing by large funds to adjust their portfolios ahead of the semi-annual settlement.

On the 24th (local time), the Dow Jones Industrial Average fell 710.16 points (2.72%) to close at 25,445.94, the S&P 500 index dropped 80.96 points (2.59%) to 3,050.33, and the Nasdaq index fell 222.20 points (2.19%) to 9,909.17, respectively.

The Nasdaq index reversed its upward trend after rising for eight consecutive trading days, breaking below the 10,000 mark again. The Dow also fell below the 26,000 level, spreading a sense of lethargy across the entire market.

The decline in the indices began with news that the number of new COVID-19 cases in Florida had risen to over 5,000. The Dow briefly plunged as much as 859 points during the session.

Following this, when California announced on the 23rd that more than 7,000 new cases had been reported in a single day, the market's losses deepened further.

US CNBC reported, based on an analysis of data compiled by Johns Hopkins University, that the seven-day average of new COVID-19 cases in the US increased by more than 30% compared to the previous week.

Before the market opened, the International Monetary Fund (IMF) lowered its global economic growth forecast for this year by 1.9 percentage points to -4.9%, marking a revision after two months. The US growth rate for this year was also revised down by 2.1 percentage points from April to -8.0%, but this was assessed to have had little impact on the market.

A Wall Street insider said, "There is not much agitation over the IMF's forecast, but many believe the market has risen too much despite the lack of a full economic recovery. However, the market movements still seem to be within the expected range."

Coincidentally, on the same day, David Solomon, CEO of Goldman Sachs, said, "The stock market has somewhat gotten ahead of the outlook for corporate earnings," adding, "If I am right, we will see rebalancing over time," suggesting the possibility of a future decline.

In the US stock market, it has been anticipated that major institutional investors might engage in rebalancing of their holdings ahead of the semi-annual settlement at the end of this month, which could lead to a decline in the indices during this process.

A Wall Street insider explained, "It seems that the competition for returns between large investment banks and individual investors known as Robinhood has begun."

This content was produced with the assistance of AI translation services.