Stocks plunge on weak Fed projection and rising COVID-19 cases

Markets fell sharply on Thursday.

The S&P 500 plunged 5.9 percent, the STOXX Europe 600 tumbled 4.1 percent and the Nikkei 225 fell 2.8 percent.

The falls were mostly attributed to the Federal Reserve's weak economic projections made on Wednesday. It had forecast a 6.5 percent contraction by the end of the year on a year-over-year basis, with the unemployment rate ending at 9.3 percent.

A continuing rise in COVID-19 cases also affected sentiment. The global case tally for the disease rose to 7.39 million on Thursday. In the US, the seven-day average of new cases over the past two weeks is still rising in more than 20 states.

“The stock market has almost had blinders on,” said Kristina Hooper, Invesco chief global market strategist.

Still, Hooper noted: “Typically the initial reaction to the Fed press conference is not the subsequent reaction. There needs to be some digestion by investors.”