The Dow is approaching 600 points as the economic outlook becomes increasingly dangerous
Although U.S. financial institutions have received health care from the central bank, they will need to raise additional capital to protect themselves from losses and preserve the ability to lend for work in the country.
Banks will also not be allowed to repurchase shares in the third quarter, and shareholder dividends will be limited.
But economic data again pointed to some worrying areas on the U.S. long road to recovery on Friday.
Meanwhile, the University of Michigan reported that consumer sentiment declined in the second half of June, in step with a resurgence in Covid-19 cases in parts of the country.
So far, the stock market has proven resilient to rising new infection rates in states like Texas and Florida. This is partly related to the Fed’s commitment to loosen its monetary policy.
A large post-closure rally that sent stocks more as the economy began to reopen may have been fully boosted by a central bank stimulus, suggested Fawad Razaqzada, a market analyst at ThinkMarkets, so reselling for fear of the virus could result in an even deeper decline.
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