Stocks were bludgeoned in yet another volatile session on Wednesday, sinking to a three year low with worldwide cases of the coronavirus soaring above 200,000, amid panic selling that nearly wiped out all of the gains made since President Donald Trump was inaugurated on Jan. 20, 2017.
The ongoing COVID-19 crisis has forced governments around the world to consider stimulus measures and imposing stiff restrictions to prevent further spreading. However, the economic fallout is already being felt, with several indicators deteriorating sharply, and Wall Street predicting a recession this year.
“There is no longer doubt that the longest global expansion on record will end this quarter,” JPMorgan Chase economist Bruce Kasman wrote in a note on Wednesday. “The key outlook issue now is gauging the depth and the duration of the 2020 recession.”
Wednesday’s volatile session shaved over 1,300 points off the Dow Jones Industrial Average, which settled below the psychologically-important level of 20,000 — its lowest close since February 2017 and deep in bear market territory. Oil’s demand and supply woes have also dragged the commodity to its lowest levels in nearly two decades.
Meanwhile, the S&P 500 plummeted, triggering a market-wide temporary halt to trading before closing down by over 5% on the day. This was the second time in three days the blue-chip index invoked a so-called “circuit breaker” during regular trading, which is intended to prevent extreme losses.
Traders also booked some profits after a brisk rally helped investors recoup some of Monday’s ugly losses that saw the Dow Jones Industrial Average sink in its worst day since the Black Monday sell-off of 1987.
The coronavirus pandemic continues to keep investors on edge, as one major economy after the other shuts its borders to stem the outbreak, and considers measures to fight the rising financial and economic disaster that COVID-19 is leaving in its wake.
The Trump administration is putting the final touches on a fiscal pump-priming package to ward off the effects of the COVID-19 outbreak. With both Democrats and Republicans coalescing around the urgent need to backstop consumers, the stimulus is likely to top $1 trillion. On Wednesday, the Senate approved a bill that would pay for sick leave, expanded job benefits and coronavirus testing.
According to Eurasia Group’s Todd Mariano, “the most powerful factor spurring Congress forward will continue to be the deterioration of the U.S. economy as it experiences a historic shutdown. More than anything else, even outweighing electoral considerations, this has served to supersede partisan politics and concentrate minds in lightning fashion over the past ten days, and that will likely continue over the next few weeks.”
Monetary policymakers also stepped in with further stimulus Tuesday. In a move anticipated by many market participants, the Federal Reserve announced Tuesday it would be relaunching its financial crisis-era Commercial Paper Funding Facility, a program helping give U.S. companies increased access to financing amid the pandemic-related disruptions.
Volatility stemming from the outbreak has seen the Dow move up or down by 1000 points or more for 8 straight days, and 11 times total in the last month, according to Yahoo Finance data.
4:00 p.m. ET: Dow closes below 20K, wiping out nearly all of Trump era's gains; oil sinks to 18-year low
Here were the main moves in markets as of 4:00 p.m. ET:
S&P 500 (^GSPC): -130.85 (-5.17%) to 2,398.34
Dow (^DJI): -1,333.34 (-6.28%) to 19,904.04
Nasdaq (^IXIC): -344.94 (-4.70%) to 6,989.84
Crude (CL=F): -$4.69 (-17.40%) to $22.26 a barrel
Gold (GC=F): -$30.80 (-2.02%) to $1,495.00 per ounce
10-year Treasury (^TNX): +26.9 bps to yield 1.2660%
3:45 p.m. ET: ‘King Dollar’ raising fears for London
According to Bloomberg, liquidity in the foreign exchange markets has evaporated. The market, which sees daily turnover of $6.6 trillion, has been characterized by traders fearful of taking bets against a surging dollar, as London weighs a strict lockdown to fight the coronavirus. The city is a global financial center in its own right.
The trade-weighted dollar index (DX=F) surged by over 1%, with the greenback appreciating against every major currency in a wave of safe-haven buying.
2:30 p.m. ET: U.S. crude oil prices sink 24%, drop to a more than 18-year low
Crude oil prices extended declines Wednesday amid lingering concerns over a price war between production giants Saudi Arabia and Russia. Lower travel demand has also continued to weigh on prices amid the coronavirus outbreak.
U.S. West Texas intermediate crude oil prices plunged 24.4% to settle at $20.37 per barrel Wednesday afternoon, bringing the commodity to its lowest price since February 2002.
1:15 p.m. ET: Stocks extend losses after trading resumes post-halt
The S&P 500 added to losses even after a 15-minute trading halt intended to help mitigate heavy selling lifted at 1:11 p.m. ET. The blue-chip index sank 7.4%, or 186.77 points, while the Dow was off more than 8%, or 1,760.63 points.
12:56 p.m. ET: S&P 500 drops 7%, triggers market-wide circuit breaker
The S&P 500 tumbled 7% Wednesday afternoon, triggering a so-called circuit-breaker on the New York Stock Exchange and halting trading for 15 minutes to prevent further extreme losses.
Trading is set to resume at 1:11 p.m. ET.
Here are the next levels the S&P 500 needs to hit to trigger further circuit breakers during Wednesday’s session. Each percentage decline is based on Tuesday’s closing prices:
Level 2: 2,200.39 (-13%): 15 minute trading halt
Level 3: 2,023.35 (-20%): Halt for the rest of Wednesday’s session
12:35 p.m. ET: Dow erases gains since Trump’s inauguration in January 2017
At the lows of the session so far, the Dow shed more than 1,500 points to reach a level of 19,646.78. This was below the index’s level at the close of Jan. 20, 2017, the day of President Donald Trump’s inauguration.
On Trump’s inauguration day, the Dow closed at a level of 19,827.25, having risen 95 points from the close of Jan. 19, 2017.
11:19 a.m. ET: Stocks extend losses, Dow plunges 1,300+ points
Stocks extended losses as the trading session continued, with the Dow off more than 1,300 points less than two hours into Wednesday’s session.
Losses in the 30-stock index were led by drops in shares of UnitedTechnologies and Boeing, the latter of which has seen its stock cut by two-thirds since the start of 2020.
Off more than 10%, the Industrials sector led declines in the S&P 500. The Energy sector also slumped, as U.S. crude oil prices plunged more than 14% to below $23 per barrel.
Here were the main moves in markets, as of 11:19 a.m. ET:
S&P 500 (^GSPC): 2,374.78, down 154.41 or -6.11%
Dow (^DJI): 19,843.01, down 1,394.37 or -6.57%
Nasdaq (^IXIC): 6,973.74, down 353.98 or -4.73%
Crude (CL=F): $22.88 per barrel, -$4.07 or -15.10%
Gold (GC=F): $1,493.80, down -$32.00 or -2.1%
10-year Treasury (^TNX): 1.07, up 7.4 basis points
10:59 a.m. ET: Tesla-competitor Nio forecasts 1Q sales drop, citing virus concerns
Chinese electric car-maker Nio said it expects to see sales drop by more than 20% to as little as 1.2 billion yuan, or $171 million, during the current quarter, citing a demand impact due to the coronavirus outbreak, which had its first epicenter in China.
Vehicle deliveries are expected to drop as much as 15% in the first quarter over the same period last year, the company added in a statement.
“We started 2020 in a challenging environment due to the COVID-19 outbreak. While we keep safety and health of our global employees a top priority, our teams strive to resume productions, expand our traffic channels, integrate our online and offline sales efforts and offer best services possible to bring business and operation back to normal,” CEO William Li said in a statement. “Looking into year 2020, we are confident that we will produce the most competitive electric SUVs in China, including ES6, all-new ES8 and EC6, together with more comprehensive battery and power solutions.”
Nio faces an uphill battle amid the coronavirus outbreak, with China’s auto industry as a whole already weak in 2019. In February, overall car sales in China plummeted 80%, the biggest drop on record.
Shares of Nio, which trade on the Nasdaq, have declined about 40% for the year to date through intraday trading Wednesday.
10:05 a.m. ET: Caesars becomes latest casino company to close amid coronavirus outbreak
Gaming and casino company Caesars announced Wednesday it would temporarily halt operations in North America as the coronavirus outbreak continues to grip key parts of the region.
“It has become clear that we must take this extreme action to help contain the virus and protect the safety and well-being of our team members and guests,” said Caesars Entertainment CEO Tony Rodio.
The company did not provide an expected date to reopen but said it “looks forward to welcoming back team members and guests as soon as appropriate.”
“Caesars has a strong liquidity position with more than $2.8 billion of cash on hand,” the company said in a statement. “While the Company believes its current cash position is more than sufficient to fund its obligations, it is also taking appropriate measures to reduce operating and capital expenses, as necessary.”
Earlier this week, peer casino giant Wynn Resorts said it would be temporarily shutting its Las Vegas and Boston properties for two weeks. Similarly, MGM said its eight resorts on the Las Vegas Strip, including major names like Bellagio and Mirage, will close “until further notice.”
10:05 a.m. ET: Boeing hammered (again) as market frets over liquidity crunch
The aerospace giant’s stock (BA), which is also a Dow component, is taking it on the chin. The double-barreled catastrophe of its idled 737 MAX and the coronavirus crisis has triggered a rout in the stock, which is off around 15% to trade above $104. Amid reports that Boeing is seeking at least $60 billion in aid, the shares are in fire sale territory.
For context, Boeing’s 52 week high was just shy of $400 — meaning it’s lost nearly 2/3 of its value since then.
9:45 a.m. ET: Trump announces ‘mutual’ border closing with Canada
In the wake of Canada tightening its border, President Donald Trump on Wednesday announced the U.S. would also shut its side of the fence to ‘non-essential’ traffic. The move will not impact trade flows, the president said.
9:30 a.m. ET: Stocks tumble at the opening bell
Black Wednesday, here we come: Wall Street immediately hit the collective sell button at the opening bell, with beleaguered investors spooked by the worsening coronavirus pandemic, and no immediate answers on how to contain soaring infection rates.
Here’s where the major indexes opened as of 9:30 ET:
S&P 500 (^GSPC): 2,388.98, down 140.21 or -5.54%
Dow (^DJI): 20,002.76, down 1,234.62 or -5.81%
Nasdaq (^IXIC): 6,985.77, down 349.01 or -4.76%
Crude (CL=F): $23.84 per barrel, -$3.11 or -11.54%
Gold (GC=F): $1,509.40, down -$16.40 or -1.07%
10-year Treasury (^TNX): 1.095, up +0.098
8:30 a.m. ET: Housing starts fall less than expected for February, but building permits post steeper than anticipated drop
New housing starts dropped just 1.5% month on month to a seasonally adjusted annual rate of 1.599 million in February, the Census Bureau said Wednesday, coming in ahead of expectations for 1.500 million, according to Bloomberg data. The results suggested a still-strong housing market heading into the coronavirus outbreak escalation in the U.S.
January’s housing starts were upwardly revised to see a 1.4% month on month gain to 1.624 million, from the decline of 3.6% to 1.567 million previously reported.
Building permits, a proxy for future home-building, dropped more than expected, however. Permits for new-home construction fell 5.5% month over month to a seasonally adjusted annual rate of 1.464 million in February. Consensus economists had expected building permits to come in at a seasonally adjusted annual rate of 1.500 million for the month. In January, building permits had surged more than 9% to 1.550 million.
7:59 a.m. ET: FedEx shares fluctuate after beating third-quarter expectations, suspending outlook due to COVID-19
Shares of FedEx (FDX) were volatile during the Tuesday to Wednesday overnight session, as investors weighed the impact of the COVID-19 outbreak on the shipping giant’s outlook.
For the three months ended February 29, FedEx reported adjusted earnings of $1.41 per share on revenue of $17.5 billion. This beat expectations on both measures, with consensus analysts looking for $1.27 per share on revenue of $16.82 billion, according to Bloomberg data.
However, FedEx suspended its full-year 2020 guidance amid uncertainty caused by the coronavirus outbreak. While the company said it is beginning to see a cargo rebound in China – the original epicenter of the coronavirus outbreak – it is expecting demand in Europe to drop as the virus escalates in that region.
“We are anticipating more softness there in Europe, but the U.S. is strong, and Asia is in really good shape as we speak today,” FedEx chief marketing and communication officer Brie Carere said during a call with analysts Tuesday.
FedEx shares dropped 4.7% Wednesday morning, turning around after rising more than 7% Tuesday evening after results were initially released.
7:17 a.m. ET Wednesday: Stock futures tumble, triggering a trading halt
Futures for the three major indices dropped early Wednesday, signaling another session of sharp declines in the markets. Earlier, contracts on the S&P 500, Dow and Nasdaq slid enough to reach their lower trading limit for the session, preventing further losses.
Here were the main moves in markets, as of 7:18 a.m. ET:
S&P 500 futures (ES=F): 2,393.50, -92.00 or -3.7%
Dow futures (YM=F): 20,145.00, -821.00 or -3.92%
Nasdaq futures (NQ=F): 7,077.25, -328.00 or -4.43%
Crude oil (CL=F): $25.38, -$1.57 or -5.83%
10-year Treasury note: yielding 1.119%, or up 12.3 basis points
6:15 p.m. ET Tuesday: Stock futures up slightly in early trading
Futures for each of the three major indices were up slightly as the Asia trading session got underway, after a big rally helped the Dow claw back from a nearly 3,000 point dive.
Here were the main moves in markets, as of 6:15 p.m. ET:
S&P 500 futures (ES=F): 2,484.00, -1.50 or -0.06%
Dow futures (YM=F): 20,829.00, -31.00 or -0.15%
Nasdaq futures (NQ=F): 7,373.00, -19.25 or -0.26%
Crude oil (CL=F): 26.72, -0.23 or -0.85%