Trading
is halted for 15 minutes as traders work on the floor at the opening bell of
the Dow Industrial Average at the New York Stock Exchange on March 12, 2020 in
New York. (AFP photo)
Source:
Press TV
The
escalating corona virus emergency Thursday sent stocks to their worst losses
since the Black Monday crash of 1987, extending a sell-off that has now wiped
out most of Wall Street's big run-up since President Donald Trump's election.
The
S&P 500 plummeted 9.5%, for a total drop of 26.7% from its all-time high,
set just last month. That puts it way past the 20% threshold to make this a
bear market, snapping an unprecedented, nearly 11-year bull-market run. The Dow
Jones Industrial Average sank 10% for its worst day since a nearly 23% drop on
Oct. 19, 1987.
European
markets lost 12% in one of their worst days ever, even after the European
Central Bank pledged to buy more bonds and offer more help for the economy.
The
heavy losses came amid a cascade of cancellations and shutdowns across the
globe - including Trump's suspension of most travel to the US from Europe - and
rising worries that the White House and other authorities around the world
can't or won't counter the economic damage from the coronavirus pandemic any
time soon.
"The
news just continues to get worse, and the travel ban puts an exclamation point
on the weakness we're going to see in global GDP and, in turn, the US,"
said Liz Ann Sonders, chief investment strategist at Charles Schwab.
"We're starting to get a sense of how dire the impact on the economy is
going to be. Each day the news doesn't get better, it gets worse. It's now has
hit Main Street to a more significant degree."
Stocks
fell so fast on Wall Street at the opening bell that they triggered an
automatic, 15-minute trading halt for the second time this week. The so-called
circuit breakers were first adopted after the 1987 crash, and until this week
hadn't been tripped since 1997.
The
Dow briefly turned upward and halved its losses at one point in the afternoon
after the Federal Reserve announced it would step in to ease "highly
unusual disruptions" in the Treasury market. But the burst of momentum
quickly faded.
Trump
often points proudly to the big rise on Wall Street under his administration
and warned a crowd at a rally last August that "whether you love me or
hate, you gotta vote for me," or else your 401(k) will go "down the
tubes."
Just
last month, the Dow was boasting a nearly 50% gain since Trump took the oath of
office on Jan. 20, 2017. By Thursday's close, the Dow was clinging to a 6.9%
gain, though it was still up nearly 16% since just before Trump's election in
November 2016.
On
Wednesday, the Dow finished the day down more than 20% from its all-time high,
set just last month, officially entering what is known as a bear market for the
first time in over a decade.
The
combined health crisis and retreat on Wall Street heightened fears of a
recession.
"This
is bad. The worst and fastest stock market correction in our career,"
Chris Rupkey, chief financial economist at MUFG Union, said in a research note
overnight. "The economy is doomed to recession if the country stops
working and takes the next 30 days off. The stock market knows it."
The
coronavirus has infected around 128,000 people worldwide and killed over 4,700.
The death toll in the US climbed to 39, with over 1,300 infections. For most
people, the virus causes only mild or moderate symptoms, such as fever and
cough. For some, especially older adults and people with existing health
problems, it can cause more severe illnesses, including pneumonia. The vast
majority of people recover from the virus in a matter of weeks.
In
a somber prime-time address Wednesday night from the White House, Trump
announced the new travel ban as well as measures to extend loans, payroll tax
cuts and other financial relief to individuals and businesses hurt by the
crisis.
But
the travel restrictions represented another heavy blow to the already battered
airline and travel industries, and the other measures did not impress Wall
Street.
"What
markets are waiting for are efforts to contain the virus in a very aggressive
way, ways we've seen in other countries," said Nela Richardson, investment
strategist at Edward Jones. "Short of that, nibbling around the edges,
maybe doing something that can help a firm with a very short-term impact or
help an employee, doesn't hurt, but it's not the bull's-eye, and it's not as
targeted as the markets would like to see."
Michael
McCarthy of CMC Markets said: "The market judgment on that announcement is
that it's too little, too late."
The
damage was worldwide and eye-popping. Among the big moves:
-
Travel stocks again were among the hardest hit. Norwegian Cruise Line and Royal
Caribbean Cruises both lost roughly a quarter of their value. Another drop for
United Airlines put its loss for the year at more than 50%.
-
Oil continued its brutal week, with benchmark US at $31 per barrel.
-
In Asia, stocks in Thailand and the Philippines fell so fast that trading was
temporarily halted. Japan's Nikkei 225 sank 4.4% to its lowest close in four
years, and South Korea's market lost 3.9%.
Perhaps
more alarming were complaints in recent days by investors that trading in the
Treasury market wasn't working well. For reasons that weren't immediately
clear, traders said they were seeing surprisingly large gaps in prices being
offered by buyers and sellers. That threatened to cause the market to seize up.
In
a surprise move, the Fed said it would pump in at least $1.5 trillion to help
calm the market and facilitate trading.
After
earlier thinking that the virus could remain mostly in China and that any dip
in the economy would be followed by a quick rebound, investors are seeing the
damage and disruptions mount, with Italy locking itself down, the NBA
suspending games and authorities in the US and beyond banning large gatherings
and closing schools.
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