Dow sinks 8% as a sell-off slamming global markets deepens; trading halted
NEW YORK – The sell-off bludgeoning financial markets around the world got even worse Thursday as the economic pain caused by the coronavirus became more painfully clear. Worries are rising that the White House and other authorities around the world can’t or won’t help the weakening economy soon.
After the Dow Jones Industrial Average closed in a bear market for the first time in more than a decade, President Donald Trump said late Wednesday he would restrict travel to Europe in hopes of containing the virus. It’s the latest hit for an airline industry already battered by frightened travelers cancelling plans, and market losses accelerated around the world as Trump spoke while giving few details about a big stimulus program that could help.
The S&P 500 was down 7%, as of 10:15 a.m. Eastern time, after trading was temporarily halted following a steep drop in the first few minutes of trading. The index is set to join the Dow in entering a bear market after losing more than 20% from its record set last month, and one of the greatest eras in Wall Street’s history is crumbling. The Dow was off about 1,800 points, or close to 8%.
The damage was worldwide and eye-popping. Among the big moves:
– European stocks tumbled 10%, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.
– 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%.
– Treasury yields, which were one of the first markets to sound the alarm on the economic risks of the virus, fell further in an indication of more fear in the market. The yield on the 10-year Treasury fell to 0.65% from 0.82% late Wednesday as investors are willing to own bonds that pay close to nothing in exchange for safety.
Not only has the degree of the market’s drop in recent weeks been breathtaking, so has its speed. If the S&P 500 remains under 2,708.92, which looks very likely, it would be the fastest that the index has fallen from a record to a bear market since World War II, according to CFRA.
It was just two days ago that the S&P 500 soared nearly 5% amid hopes that big stimulus from the U.S. government could arrive soon to help cushion the economic blow from the virus. Trump’s pitch for a cut in payroll taxes has hit resistance on Capitol Hill, though, and hopes dissipated after Trump’s Wednesday remarks from the Oval Office, where he blamed the “foreign virus.”
“The market judgement on that announcement is that it’s too little too late,” said Michael McCarthy of CMC Markets.
Investors know that stimulus from governments and central banks around the world won’t solve the COVID-19 crisis, which global health authorities declared a pandemic Wednesday. Only the containment of the virus can do that. But those measures could help support to the economy in the meantime, and investors fear things would be much worse without them.
For most people, the new coronavirus 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 illness, including pneumonia.
The vast majority of people recover from the new virus, but the fear is that COVID-19 could drag the global economy into a recession as quarantines and other measures force companies to close shop and worries about the virus scare customers away.
Many analysts say markets will continue to swing sharply until the number of new infections stops accelerating. More than 126,000 people in more than 110 countries have been infected.
Travel stocks again were among the market’s hardest hit. Norwegian Cruise Line lost more than a quarter of its value, and Royal Caribbean Cruises fell 23.6%.
Crude continued its brutal week of trading as producers continue to pull oil from the ground even as demand sags from a virus-weakened economy. Brent crude, the international standard, fell $2.90, or 8.1%, to $32.89. Benchmark U.S. crude lost $2.36 to $30.62 per barrel.
The S&P 500 was down 7%. The Dow Jones Industrial Average fell 1,842, or 7.8%, to 21,706, and the Nasdaq was down 6.5%.