Dow plummets again as sell-off over the coronavirus deepens
An early plunge of 7% on Wall Street triggered a trading halt as a sell-off slamming global markets continued.
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NEW YORK — The deepening coronavirus crisis sent stocks into another alarming slide Thursday, extending a sell-off that has wiped out most of the big run-up on Wall Street since President Donald Trump’s inauguration.
The Dow Jones Industrial Average plummeted more than 2,250 points, or nearly 9.7%, at one point but started climbing back after the Federal Reserve said it would step in to the bond market to address “highly unusual disruptions” in trading of Treasury securities. Still, the Dow was still down nearly 1,600 points, or 6.7%, in the early afternoon, while the broader S&P 500 was off 6.3%.
European markets lost 12% in one of their worst days in history.
The steep fall came amid a cascade of cancellations and shutdowns across the globe and rising worries that the White House and other authorities around the world can’t or won’t help the economic damage from the coronavirus pandemic any time soon.
On Wall Street, stocks fell so fast 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 activated since 1997.
Trump often points proudly to the big rise on Wall Street under his administration, and the Dow just last month was boasting a nearly 50% gain since he took the oath of office on Jan. 20, 2017. By early Thursday afternoon, the Dow was clinging to a 9% gain. It was still up 17% since just before Trump's election in November 2016.
A drop on Wednesday sent the Dow into what is known as a bear market for the first time in more than a decade when the index lost more than 20% from its all-time high, set just last month. The S&P 500 was likewise in danger of finishing the day Thursday in bear market territory. That would bring to a close the longest bull run in Wall Street history.
The latest sell-off came after Trump announced late Wednesday he would restrict travel to the U.S. from Europe in hopes of containing the virus, dealing another hit to the already battered airline and travel industries. Trump also outlined measures to extend financial help to individuals and businesses hurt by the crisis.
But “the market judgment on that announcement is that it’s too little, too late,” said Michael McCarthy of CMC Markets.
Strategists at Morgan Stanley said in a report Wednesday night that conditions have gotten bad enough to prod a deeply divided Washington to act, but “we think action may not be imminent and are unsure it will be sufficient."
“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. Bet on it.”
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 U.S. down to $31 per barrel.
European stocks tumbled more than 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%.
The interest payments that investors are willing to accept for buying U.S. Treasury bonds fell even further in another sign of fear in the market. In uncertain times, investors looking for safety sink money into bonds, pushing up the price but driving down the yield.
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 U.S. and beyond banning large gatherings and closing schools.
For most people, the 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 illnesses, including pneumonia. The vast majority of people recover from the virus in a matter of weeks.
AP Business Writer Yuri Kageyama contributed from Tokyo.