U.S. stocks tumbled more than 9% on Thursday, with Wall Street extending its dramatic slide into a bear market as the Dow, S&P 500 and Nasdaq all crashed in response to the global coronavirus crisis.
David Levy, chairman of the Jerome Levy Forecasting Center, said on Thursday that “the pandemic’s economic disruptions threaten to trigger a global financial crisis that will be worse outside of the United States than 2008-2009.”
He added that “several factors make the situation particularly worrisome” — including record debt levels, lack of wiggle room on monetary policy, and major economies that are “squabbling, economically strained...[and] poorly equipped to cope with a global financial crisis that will be especially acute in the now vast EM sector.”
By Thursday’s close, the S&P 500 dropped 9.5%, or 260.62 points, in its largest percentage decline since the Black Monday crash of October 19, 1987. The blue-chip index slid more than 20% in total from its recent closing high from mid-February, sending it into a bear market.
The Dow’s 9.99% decline Thursday was also the biggest since 1987, and constituted a drop of 2,352.6 points.
Amid the heightened market turmoil, the New York Federal Reserve stepped in midday Thursday and announced a major asset purchase program, offering $500 billion in three-month repo operations, an additional $500 billion in one-month operations and another at least $220 billion in operations with durations of two weeks or fewer.
The central bank also said its securities purchases would include a range of maturities, to match the composition of the Treasury market. While the announcement briefly helped the three major indices pare intraday losses, stocks still ended sharply in the red.
The Fed’s major infusion of liquidity came in the wake of the World Health Organization officially designating the coronavirus outbreak a pandemic on Wednesday, as the virus spread across more than 100 countries and infected well over 100,000 individuals.
A televised address Wednesday night by President Donald Trump meant to calm fears did little except feed the urge to sell. Trump said he was suspending travel from certain areas of Europe to the U.S. for the next 30 days. He also announced plans for $50 billion of low interest loans to affected businesses and suggested a delay in the April 15 tax filing deadline.
However, the speech sparked widespread confusion — and failed to mollify panic-stricken investors. Major benchmarks plunged at the open, triggering a circuit-breaker during the regular session shortly after 9:30 a.m. ET.
The COVID-19 pandemic is growing, with over 1,000 infected domestically and more than 120,000 worldwide.
“President Trump’s address to the nation was symptomatic of the lack of policy coordination in the face of a global coronavirus pandemic,” Oxford Economics’ Gregory Daco said.
“Markets reacted negatively to what was perceived as a solemn but confused speech that placed blame on other nations, omitted to focus on immediate actions to relieve the most affected individuals, and lacked in concrete fiscal and health measures to address the economic and financial impact of the virus,” the analyst added.
—
4:00 p.m. ET: Dow plunges 10% in biggest one-day percentage drop since 1987
The S&P 500, Dow and Nasdaq each fell at least 9.4% as of market close Thursday.
Here were the main moves in markets as of 4:00 p.m. ET:
Gold (GC=F): -$72.40 (-4.41%) to $1,569.90 per ounce
10-year Treasury (^TNX): +2.9 bps to yield 0.8490%
—
2:32 p.m. ET: Coronavirus cases in New York state climb by 112 to 328, Cuomo says
Cases of COVID-19 climbed by 112 to 328 on Thursday, New York Governor Andrew Cuomo said Thursday at a press briefing.
Cuomo also said that he is banning gatherings of more than 500 people in an effort to stem the spread of the coronavirus, effective 5 p.m. Friday. Schools, hospital, nursing homes, and mass transit are exempt from the ban.
—
2:27 p.m. ET: Stocks renew sell-off even after Fed announces major liquidity operation
Each of the three major indices dipped with less than two hours left of the session, returning to sharply negative territory even after the Federal Reserve announced a major liquidity operation starting Thursday. Each of the three major indices was off at least 7.3%, and the Dow shed 1,903.55 points.
—
1:02 p.m. ET: Dow pares steep losses after Fed announces $500 billion repo operation, says it will conduct purchases across range of maturities
The New York Fed announced Thursday it will be offering $500 billion in a three-month repurchase operation (repo) at 1:30 p.m. ET, offering immediate relief to tightening financial markets. It will further offer $500 billion in a three-month repo operations and $500 billion in a one-month repo operation for same day settlement tomorrow.
The move marks a major infusion of liquidity from the Fed. Yesterday, the NY Fed announced its would be offering $175 billion in overnight and $45 billion in two-week term repos.
The Fed said it will conduct purchases across a “range of maturities to roughly match the maturity composition of Treasury securities outstanding,” as part of its $60 billion reserve management purchases starting tomorrow through April 13.
Stocks immediately pared losses following the announcement. The Dow recovered more than 1,000 points, after earlier being down more than 2,000 points.
“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said in a statement. “Reserve management purchases into the second quarter will continue to be conducted with this maturity allocation. The terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation.”
—
11:50 a.m. ET: Stocks hold lows as coronavirus concerns flare
Trader Michael Gallucci works at his post on the floor of the New York Stock Exchange, Wednesday, March 11, 2020. (AP Photo/Richard Drew)
U.S. stocks showed no signs of catching a break from selling during Thursday’s session, with each of the three major indices holding onto losses of at least 7.9%.
The Energy and Financials sector led declines intraday Thursday, with each off more than 9%. In the 30-stock Dow, materials giant Dow Inc. (DOW), American Express (AXP) and Boeing (BA) were the biggest decliners.
Here were the main moves in markets, as of 11:50 a.m. ET:
S&P 500 (^GSPC): 2,523.87, down -217.51 points or -7.93%
10-year Treasury (^TNX): yielding 0.787%, down 3.4 basis points
—
11:23 a.m. ET: Trump says he anticipates markets will ‘bounce back very big’ after COVID-19: Bloomberg
President Donald Trump reiterated his reassurances amid the global coronavirus pandemic, saying he expects markets will recover from their steep losses, according to a Bloomberg report Thursday.
“It’s going to all bounce back and it’s going to bounce back very big,” Trump said at the White House Thursday during a meeting with Ireland’s Minister Leo Varadkar, Bloomberg reported.
—
10:55 a.m. ET: European stocks on track for worst day on record after Trump’s Europe travel ban, ECB rate decision
The UK’s FTSE 100 index sank more than 9% Thursday afternoon in London, as European stocks extended a drubbing amid the Trump administration’s travel ban and the European Central Bank’s (ECB) unexpected decision not to cut benchmark interest rates. The pan-European Stoxx 600 and French CAC 40 also slid more than 9% in afternoon trading, putting the former on track for its biggest one-day decline on record.
The ECB’s monetary policy decision earlier Thursday included a broad package of bond purchase and low-rate loans to help alleviate economic damage due to the coronavirus. However, the ECB did not cut its benchmark interest rate as had been expected, and as had been done by other major central bank including the Federal Reserve and Bank of England.
In a press conference following the decision, ECB Chair Christine Lagarde said “an ambitious and coordinated fiscal policy response is required to support businesses and workers at risk,” echoing statements from other central bank leaders like Fed Chair Jerome Powell who have been calling for fiscal measures to be added on top of monetary policy responses to the pandemic.
Lagarde also announced the ECB was cutting its 2020 growth forecast for the euro area to 0.8%, down from a previous estimate for 1.1% growth.
“Even if ultimately temporary by nature, [COVID-19] will have a significant impact on economic activity, in particular it will slow down production as a result of disrupted supply chains and reduce domestic and foreign demand, especially through the adverse impact of the necessary containment measures,” Lagarde said.
—
10:45 a.m. ET: NYSE will keep floor open (for now)
NYSE President Stacey Cunningham said the exchange does not currently plan to close its trading floor and that the markets were functioning as expected. The question has come up with increasing regularity, as many Wall Street firms make business continuity (ie work from home) plans, and New York City recommends employees avoid large public gatherings.
—
10:30 a.m. ET: Bloodletting continues amid rolling waves of selling
Second verse, same as the first: Stocks are extending their deep slide into correction territory, with no end in sight. The S&P 500 is on track for its worst week since Oct 2008, and 2nd worst week ever while the Dow is also set for its worst week since 2008 — and 2nd worst in 90 years (for context, that’s Great Depression era).
Here’s where major benchmarks stood as of 10:30 a.m:
10-year Treasury (^TNX): yielding 0.6750, down -0.1450
“A significant global slowdown is likely during the first half of the year as consumers avoid congregating to help stall infections. Corporate earnings will also hit a rough patch, but as consumers reengage, activity should bounce back in the third quarter,” noted Dec Mullarkey, managing director at SLC Management, which has $175 billion in assets under management.
“In the meantime, governments have to adopt a ‘do whatever it takes’ approach and use targeted fiscal programs to assure consumers remain confident and small business bankruptcies don’t escalate,” he said. “Helping to avoid significant pullbacks should help keep the job market robust.”
—
9:52 a.m. ET: U.S. stocks resume trading, sink further
The S&P 500 resumed trading following a 15-minute halt, and extended losses to 8%. The Dow was off more than 8.8%, and the Nasdaq sank 8.02% as of 9:52 a.m. ET.
—
9:35 a.m. ET: S&P 500 drops 7%, triggering halt
The S&P 500 sank 7% in the minutes after market open, setting off a market-wide “circuit-breaker” to prevent immediate further losses.
Trading will resume in 15 minutes following the halt.
Gold (GC=F): -$31.50 (-1.92%) to $1,610.80 per ounce
10-year Treasury (^TNX): -12.3 bps to yield 0.699%
—
9:09 a.m. ET: Apache slashes dividend, capital spending as oil prices slide
Apache Corp. (APA) said Thursday it will cut its dividend and capital spending plans for the year in the wake of a precipitous decline in crude oil prices.
Shares of Apache, which had been down 60% from Friday’s through Wednesday’s close, tumbled another 15% in early trading following the announcement.
Apache’s dividend reduction brought the payout down by 90% to 2.5 cents per share each quarter, from 25 cents previously. The energy company also said it would reduce its 2020 capital investment plan to a range of $1.0 billion to $1.2 billion, down from a previous range of between $1.6 billion and $1.9 billion. Apache’s number of drill rigs operated in the Permian Basin will be cut to zero.
The move mirrors that of other U.S. shale producers earlier this week, which have been frantically updating their investment and dividend payout plans this week to cope with the stunning plunge in oil prices earlier this week. Peer energy giant Occidental Petroleum Corp. (OXY) on Tuesday had slashed its own dividend by nearly 90%, and cut its capital spending plans by as much as 35% for the year.
“We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions,” Apache CEO John Christmann said in a statement. “We are also further reducing operating and overhead costs as we continue to implement our corporate redesign program, which began in the fall of 2019. These decisive actions will benefit Apache as we navigate these challenging market conditions.”
—
9:03 a.m. ET: Carnival halts Princess Cruises for 60 days amid coronavirus
Princess Cruises, owned by parent company Carnival (CCL), will temporarily pause global operations of its 18 cruise ships for 60 days, or from March 12 to May 10, the company said in a statement Thursday.
Shares of Carnival were halted in early trading ahead of the announcement. The stock tumbled 23% after shares reopened for trading, putting it on pace for its lowest price since 2009.
"Princess Cruises is a global vacation company that serves more than 50,000 guests daily from 70 countries as part of our diverse business, and it is widely known that we have been managing the implications of COVID-19 on two continents," Jan Swartz, president of Princess Cruises, said in a statement.
"By taking this bold action of voluntarily pausing the operations of our ships, it is our intention to reassure our loyal guests, team members and global stakeholders of our commitment to the health, safety and well-being of all who sail with us, as well as those who do business with us, and the countries and communities we visit around the world," he added.
—
8:30 a.m. ET: Initial jobless claims unexpectedly declined last week
New unemployment claims posted a surprise drop for the week ended March 7, suggesting the domestic labor market had yet to feel the impact from the COVID-19 outbreak.
Initial jobless claims fell to a seasonally adjusted 211,000 last week, below the 220,000 expected. The prior week’s new unemployment claims had totaled 215,000.
Continuing unemployment claims also unexpectedly fell for the week ended February 29, dropping to 1.722 million from 1.733 million the prior week.
—
8:30 a.m. ET: Producer prices sink by the most since 2015 in February, as energy prices slide
Producer prices fell by the most in five years in February, reversing a January surge, the Bureau of Labor Statistics said Thursday in its monthly report.
The headline producer price index (PPI) tumbled 0.6% in February over last month, well below the decline of 0.1% expected. PPI rose by 0.5% in January. This was the deepest plunge since January 2015.
The decrease was led by a drop in prices for final demand goods, with energy prices the biggest decliner. More than 60% of the monthly drop was attributable to the drop in prices for final demand energy, which fell 3.6%.
Excluding more volatile food and energy prices, producer prices fell 0.3% on a monthly basis in February, after a 0.5% rise in January. PPI excluding food and energy rose just 1.4% over last year in February, pulling back from the 1.7% rise at the start of the year.
—
7:37 a.m. ET: Stock futures trigger circuit-breakers as investors brace for another volatile session
Futures for the S&P 500, Dow and Nasdaq each traded more than 4% lower Thursday morning, after briefly hitting their limit-down levels late Wednesday for a second time in this week.
At the lows of the overnight session, contracts for each of the three major indices dropped some 5%, plunging enough to trigger circuit breakers to prevent further losses. The limit-down level is established each day by the Chicago Mercantile Exchange. The indices’ futures can still trade at or above the limit-down level.
Here were the main moves in markets as of 7:37 a.m. ET:
S&P 500 futures (ES=F): 2,606.25, down 134 points or -4.89%
Dow futures (YM=F): 22,344.00, down 1,231.00 points or -5.22%
Nasdaq futures (NQ=F): 7,608.5, down 395 points or -4.94%
