- The Dow Jones suffered a painful drawdown on Wednesday.
- Bloomberg exposed a secret report confirming that U.S. intelligence believes China has wildly underreported its coronavirus statistics.
- ING warns that a seemingly-optimistic manufacturing report was inflated by a quirk in the index.
The Dow Jones tumbled 1,000 points on April Fools’ Day as a fresh wave of selling ushered the stock market into the new month.
Dow bulls have plenty to be concerned about. Bloomberg’s leak of a secret U.S. government report appeared to confirm concerns that China’s coronavirus data is highly inaccurate.
Dow Jones Falls as April 1st Brings Heavy Selling
All three of the major U.S. stock market indices struggled on Wednesday:
- The Dow crashed 1,014.73 points or 4.63% to 20,02.43.
- The S&P 500 fell 4.87% to 2,458.83.
- The Nasdaq dropped 4.8% to 7,330.86.
Gold rose just 0.28% despite the glaring weakness in risk assets.
In the oil market, Brent stole the headlines with a 6% loss after a sizable build in gasoline inventories. Crude remains stuck around $20 per barrel, with Morgan Stanley forecasting prices could fall as far as $10.
In a perfect example of how dangerous the current trading conditions are for retail investors, today’s ISM Manufacturing PMI beat expectations comfortably, and the Dow plunged anyway.
ING Chief International Economist James Knightley explained this strange price action, demonstrating how the vital reading is being misrepresented by a key component of the index.
The headline index is being artificially boosted by a surge in the supplier delivery times component of the report. Normally, when delivery times are longer, this reflects demand outstripping supply – a good situation.
However today delivery times are extended because of the supply shock relating to Covid-19 with firms struggling to get inputs from China and increasingly…