(Updates to midday U.S. trading)
By David Randall
NEW YORK, May 13 (Reuters) - Stock markets tumbled on Wednesday as fears about a second wave of coronavirus infections and warnings from Federal Reserve Chairman Jerome Powell that the U.S. faces a "significantly worse" recession than any since World War II weighed on investor sentiment and boosted safe-haven bonds.
Powell's comments come as parts of the global economy are starting to reopen following a deep freeze aimed at curbing the spread of the virus that has pushed unemployment rates to their highest since the Great Depression. Benchmark equity indexes are up 25% or more since their March lows in anticipation of further government stimulus programs to help the global economy recover.
"Earnings season is largely behind us and we have entered the phase two of COVID-19 as de-confinement of economies begins, and that is creating a lot of uncertainties on a daily basis, which is weighing on markets," said Francois Savary, chief investment officer at Swiss wealth manager Prime Partners.
"We don't think this is the start of a new correction. Markets went too far, too fast and this is the consolidation."
MSCI's gauge of stocks across the globe shed 1.53% following broad losses in Europe and Asia.
In midday trading on Wall Street, the Dow Jones Industrial Average fell 491.31 points, or 2.07%, to 23,273.47, the S&P 500 lost 51.55 points, or 1.80%, to 2,818.57 and the Nasdaq Composite dropped 139.32 points, or 1.55%, to 8,863.23.
Leading U.S. infectious disease expert Anthony Fauci on Tuesday warned lawmakers that a premature lifting of lockdowns could lead to additional outbreaks of the deadly coronavirus, which has killed 80,000 Americans and brought the economy to its knees.
"We now have to see how this reopening plays out and there are a lot of risks to reopening," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
The mood was further soured by proposed legislation by a leading U.S. Republican senator that would authorize President Donald Trump to impose sanctions on China if it fails to give a full account of events leading to the coronavirus outbreak.
Safe-haven assets rose as investors positioned for an extended economic downturn. Benchmark 10-year notes last rose 17/32 in price to yield 0.6379%, from 0.692% late on Tuesday.
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, regained some ground on expectations of deeper production cuts.
U.S. crude recently fell 0.89% to $25.55 per barrel and Brent was at $29.65, down 1.1% on the day.
Reporting by David Randall; Editing by Bernadette Baum