The Dow Jones industrial average fell by almost 10 percent on Thursday as fears of the coronavirus escalated — it’s biggest decline since the stock market crash of 1987.
The Dow lost 2,352,27 points at the close, down 9.98 percent, to 21,200 — despite a $1.5 trillion rescue plan by the Federal Reserve. The plunge marked the Dow’s second day in bear market territory after the National Basketball Association suspended its season and beloved actor Tom Hanks and his wife announced they too are infected.
The S&P 500 also tumbled into bear territory for the first time in almost 11 years on Thursday following a 7 percent decline at the open that resulted in a 15 minute trading halt for the second time in a week.
The broad stock index ended the day down 9.5 percent, or 250 points, to 2,480, while the Nasdaq closed down 9.4 percent to 7,201.80.
A bear market is generally called when stocks fall 20 percent from recent highs during a period of widespread negative sentiment.
Traders tied Thursday’s slump in part to President Trump’s Wednesday night speech to severely restrict travel from continental Europe, which further raised the prospect of a worldwide economic slowdown.
The freefall took a short breather midday after the Federal Reserve said it would flood the markets with short-term funding “to address highly unusual disruptions” related to the coronavirus outbreak. The announcement, which centers on short-term loans to broker-dealers, at first helped pare back earlier losses — but not for long.
Traders on Thursday complained that monetary policy alone cannot save the country from a pandemic that’s hurting a slew of industries from the airlines to Broadway as people cancel their travel plans and large gathering become taboo.
“We wanted a bazooka,” said one hedge fund manager that trades US Treasuries. “What we got was a handgun with rubber bullets. But in fairness to the Fed, what we really need are test kits for this virus.”
The carnage is likely to continue until the US government puts forward a concrete fiscal stimulus package to blunt the economic damage of the coronavirus pandemic — something that was noticeably absent from Trump’s speech on the crisis, according to Quincy Krosby, chief market strategist at Prudential Financial.
Thursday’s selloff was “the market screaming … that you’re going to see a deterioration in the economic landscape, and we need these proposals intact and delivered as an emergency measure to cushion the economy,” Krosby said.
Adding to the declines, experts say, is the push for staffers to work from home to avoid getting infected. On Wall Street, that means fewer traders who can take big risks, including buying stocks when they fall.
“These guys aren’t going to do anything from home that isn’t signed off on by like 10 people, which means they won’t do it,” said Daniel Simulevic, a global macro fund manager. “There’s a human dimension to this. It helps to be in a room with other people when you’re making risky decisions.”
On Thursday, a spokeswoman for Steve Cohen’s hedge fund Point72 told The Post that it was the latest fund to tell its employees to work from home.
Trump offered reassurances Thursday that the markets would be “just fine” even as the selloff unfolded.
“It’s gonna all bounce back, and it’s gonna bounce back very big at the right time,” Trump told reporters in the Oval Office.
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