Wall Street sell-off continues as investors wait for stimulus package from Washington
Allianz chief economic adviser Mohamed El-Erian reacts to stocks plunging amid coronavirus fears on ‘America’s Newsroom.’
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Mohamed El-Erian, chief economic adviser at Allianz Global Investors, told “America’s Newsroom” on Wednesday that “fear is understandable” among investors during the coronavirus pandemic, but encouraged market watchers to “look at the destination, not just a journey.”
El-Erian, who served as chair of President Obama's Global Development Council, made the comments as U.S. stocks plunged again amid fears of the economic impact of the virus. Trading was halted for 15 minutes Wednesday morning when the S&P 500 tumbled more than 7 percent.
The benchmark index's slide marked the second time trading was halted this week.
At one point, the Dow Jones Industrial Average index fell 1,847 points to 19,390 -- wiping out all of its gains made since President Trump took office in January 2017.
The selling comes as the Trump administration and Congress hammer out the details of a $1 trillion stimulus package designed to prop up the most affected sectors of the U.S. economy and give cash to those out of work.
When asked if he agrees with the sentiment that if the health crisis is not solved, the economy will continue to get bad no matter what is done to help stabilize it, El-Erian said he agreed for two reasons.
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He noted that one reason is that “the globe is going into a recession.” He said the second reason is that people will not reengage in the economy unless the virus outbreak is brough under control.
“It’s a complete stop of economic activity,” he said. “We have never seen something like this and it’s very important to ring the alarm bell about the need to minimize damage until we get the health response.”
The COVID-19 outbreak has infected more than 214,000 people worldwide and killed more than 8,700, according to the latest figures from Johns Hopkins University. The virus has paralyzed the global economy as air travel has been drastically reduced and restaurants and bars have either closed or had their services restricted around the world.
When host Sandra Smith asked El-Erian what he would tell people who are fearing for their retirement accounts and what this means in the short-term and long-term he said, “I would tell them, it’s totally understandable.”
“You are being taken out of your comfort zone in so many ways, not just what you’re seeing on TV in terms of what’s happening to your retirement, you can’t have any aspect of your normal life,” he continued. “You’re seeing empty shelves, you are experiencing things that were unthinkable, so of course you are scared, but put it in perspective.”
El-Erian then said, “We will get through this,” referencing the “massive response going on, not just by the government, but by the private sector acting individually and collectively.”
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”We are seeing companies put social responsibility ahead of short-term profits,” he noted, adding that “we will get over this.”
Fox Business’ Jonathan Garber contributed to this report.
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