On The Money: Dow plunges more than 1,800 points as rising COVID-19 cases roil Wall Street | Trump rips Fed after Powell warns of 'long road' to recovery

On The Money: Dow plunges more than 1,800 points as rising COVID-19 cases roil Wall Street | Trump rips Fed after Powell warns of 'long road' to recovery
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THE BIG DEAL—Dow plunges more than 1,800 points as rising COVID-19 cases roil Wall Street: Stocks plummeted Thursday as the emergence of new coronavirus hotspots and a caution from the Federal Reserve chairman shook Wall Street after months of steady gains.

  • The Dow Jones Industrial Average closed with a loss of 1,861 points, plunging 6.9 percent for its worst day of losses since March. 
  • The S&P 500 index closed with a loss of 5.9 percent, and the Nasdaq composite sank 5.3 percent on the day.

All three major U.S. stock indexes closed with their steepest single-day losses since crashing in March amid the beginning of stay-at-home orders imposed to slow the spread of COVID-19. Thursday’s dive comes after more than two months of steady recovery toward the record highs seen before the pandemic derailed the economy. I have more on the sell-off here.

Steady rally comes to screeching halt: Despite the loss of more than 21 million jobs and the deaths of more than 112,000 Americans due to the coronavirus, investors had gradually upped their bets on a quick economic recovery through April and May as states began loosening business closures and travel restrictions.

The surprise addition of 2.5 million jobs in May, according to the Labor Department, also fueled hopes for a quicker than expected rebound from a recession of unprecedented scale and speed.

But Thursday’s abrupt reversal comes as states across the U.S. see spiking COVID-19 cases and diminishing hospital capacity to handle a new wave of infections.

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  • Week-over-week case counts are rising in half of all U.S. states, and only 16 states plus the District of Columbia have seen their total case counts decline for two consecutive weeks.
  • North Carolina, California, Mississippi and Arkansas are all facing record levels of hospitalizations, and the virus appears to be quickly spreading in Houston, Phoenix, South Carolina and Missouri.

Some market experts also attribute Thursday’s losses to Fed Chairman Jerome Powell’s Wednesday prediction of a “long road” to recovery.

During a Wednesday press conference, Powell said that while the U.S. may see significant job growth in coming months as people return to their jobs," the country is "still going to face, probably, an extended period where it will be difficult for many people to find work."

Trump responds: President TrumpDonald John TrumpJoe Arpaio loses bid for his old position as sheriff Trump brushes off view that Russia denigrating Biden: 'Nobody's been tougher on Russia than I have' Trump tees up executive orders on economy but won't sign yet MORE, who frequently lashes out at the Fed when markets turn south, blasted the bank for underestimating how quickly the U.S. economy could recover and how soon a COVID-19 vaccine would be available.

Trump's top economic advisor Larry KudlowLarry KudlowMORE also criticized Powell, urging the Fed chief to ease up on the dour forecasts.

"I do think Mr. Powell could lighten up a little when he has these press offerings. You know, a smile now and then, a little bit of optimism," Kudlow said on Fox Business Network.

"I'll talk with him and we'll have some media training at some point.”

The takeaway: One day of steep losses can be reversed fairly quickly, so the financial implications of today’s sell off remain to be seen. But Trump on Thursday showed once again how quickly he’s willing to pin blame on Powell for any economic headwinds, which raises significant political risks for the Fed as it scrambles to keep the economy afloat.

LEADING THE DAY

More than 1.5 million file new jobless claims in first week of June: More than 1.5 million Americans filed new claims for unemployment benefits during the first week of June, according to Labor Department data released Thursday.

  • In the week between May 31 and June 6, the total number of seasonally adjusted initial claims for jobless benefits fell to 1,542,000 from a revised total of 1,897,000 in the final week of May. 
  • Roughly 705,676 Americans also filed new claims for Pandemic Unemployment Assistance, an extension of jobless benefits to workers who lost their jobs during the pandemic but do not qualify for standard unemployment insurance.

Weekly new claims for unemployment still remain far above historic levels but have dropped steadily from a peak of 6.9 million in April. The new batch of claims also came less than a week after a surprisingly strong May employment report showed the U.S. adding 2.5 million jobs that month, largely due to 2.7 million workers returning from furloughs. I have more on the numbers here.

Nursing homes under scrutiny after warnings of seized stimulus checks: Nursing homes are coming under more scrutiny during the coronavirus pandemic, this time for complaints about efforts to confiscate coronavirus stimulus checks.

  • Lawmakers on both sides of the aisle are calling on the Trump administration to ensure nursing homes and assisted living facilities aren’t improperly seizing the checks from residents following alerts from the Federal Trade Commission (FTC) and state attorneys general.
  • State and federal authorities have recently notified the public about complaints of long-term care facilities demanding residents on Medicaid turn over their relief payments. 
  • Those alerts prompted prominent lawmakers to lean on various federal agencies, urging them to investigate the issue and make it clear to facilities that they aren’t entitled to the checks.

“These economic impact payments were not designed to reimburse people,” Rep. Gwen MooreGwen Sophia MooreBiden campaign adds staff in three battleground states On The Money: Dow plunges more than 1,800 points as rising COVID-19 cases roil Wall Street | Trump rips Fed after Powell warns of 'long road' to recovery Nursing homes under scrutiny after warnings of seized stimulus checks MORE (D-Wis.) told The Hill. “And we have provisions that protect the elderly.”

The Hill’s Naomi Jagoda explains here.

Read more: The Centers for Medicare and Medicaid Services (CMS) said Thursday that nursing homes that confiscate residents' coronavirus stimulus payments could be subject to federal enforcement actions, including possible removal from participating in Medicaid and Medicare programs.

States need 'aggressive outreach' to help low-income people get their stimulus checks: Think tank: The Center on Budget and Policy Priorities (CBPP) on Thursday released a paper urging states to conduct "aggressive outreach" in order to help millions of low-income individuals receive their coronavirus stimulus payments.

The Treasury Department said last week that it has made around 159 million disbursements, saying payments have been sent to all eligible Americans about whom the IRS has necessary information.

But the IRS is still struggling to get payments to eligible Americans who are not typically required to file tax returns and do not receive those federal benefits.

CBPP estimated in its report that there are about 12 million people who don't file tax returns and don't receive the specified federal benefits. These people have very low incomes are are largely not elderly, according to the report.

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Naomi walks us through their recommendations here.

GOOD TO KNOW