Stocks close in the red after day of gains

"The longer the economic crisis lasts, the more disruptive it will be, and the harder it will be to come back,” said former Federal Reserve Chairman Ben Bernanke.
Image: New York Stock Exchange
A woman walks past the New York Stock Exchange (NYSE) on March 19, 2020 at Wall Street in New York City.Johannes Eisele / AFP - Getty Images

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By Lucy Bayly

The Dow Jones Industrial Average closed lower by around 35 points Tuesday, after a robust rally that saw the blue-chip index soar by 937 points at its high.

The S&P 500 closed down by 0.18 percent and the Nasdaq ended the day lower by 0.33 percent.

"Let’s win this and let’s get our country open as soon as we can," Trump said Monday night during a coronavirus task force briefing. He announced that 10 potential treatments for the coronavirus are in the trial phase, with another 15 therapeutics also likely to be tested.

While Trump said Tuesday in a meeting with executives from the nation's banks that the economy would "go like a rocket ship," former Federal Reserve Chairman Ben Bernanke tempered that Tuesday, saying, “The most important determinant in duration is the public health response."

“The longer [the economic crisis] lasts, the more people will lose their jobs and lose their association with their former employers. The longer it lasts, the more disruptive it will be, and the harder it will be to come back,” Bernanke said Tuesday, speaking at the Brookings Institution.

A number of headlines pointed to a decline in coronavirus cases across the world, leading to investor optimism — which some economists believe could be premature — that an end to the temporary shutdowns could be within grasp.

China, where the viral outbreak originated, reported no new deaths. New York Gov. Andrew Cuomo said Tuesday the rate of hospitalization in his state has fallen.

“Big data indicated very early on that social distancing is working overall,” one JPMorgan strategist wrote in an investor note.

Traders were also digesting the implications of a Jan. 29 memo from Trump's top trade adviser, Peter Navarro, which warned that millions of Americans could die if the viral outbreak was not rapidly contained.

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"The lack of immune protection or an existing cure or vaccine would leave Americans defenseless in the case of a full-blown coronavirus outbreak on U.S. soil. This lack of protection elevates the risk of the coronavirus evolving into a full-blown pandemic, imperiling the lives of millions of Americans," Navarro wrote.

Markets were also watching news from London, after British Prime Minister Boris Johnson remained in an ICU ward with worsening coronavirus symptoms. Johnson "remains in good spirits" and has not been placed on a ventilator, according to his office.

Dominic Raab, the foreign secretary and first secretary of state, who has led emergency meetings in Johnson's place, has been officially deputized to fill in where necessary. However, Michael Gove, minister for the Cabinet Office, said Tuesday that group decisions are being taken “by the Cabinet."

Unlike in the U.S. — where the 25th Amendment says the vice president becomes leader if anything happens to the president — the United Kingdom has no such formal line of political succession, partly because of its lack of codified constitution.

The Cabinet would choose an immediate successor, likely a temporary position until a long-term successor was chosen by the wider Conservative Party.

The British pound, which had been gaining ground after parts of Europe saw a decrease in the number of coronavirus cases, tumbled briefly on Tuesday on political uncertainty in the U.K.

Despite gains in recent weeks, the Dow and the S&P are still down by 20 percent from their record highs, as businesses across America struggle to remain solvent amid weeks of mandated shutdowns and banks downgrade their outlooks for the next few quarters.