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Stocks: Dow Dives as See-Saw Action Keeps Going

Stock Markets Mar 05, 2020 04:05PM ET
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© Reuters.

By Kim Khan 

Investing.com – Wall Street plunged Thursday as the coronavirus-led volatility continued and bond yields set record lows yet again.

The S&P 500 sank 3.4%, while the Nasdaq Composite fell 3.1%.

The Dow Jones Industrial Average closed down 3.6%, shedding 969 points.

The one-day-surge-one-day-plunge action is more evidence that Wall Street is still in the dark about how much impact Covid-19 will have on economic activity and corporate bottom lines.

California declared a state of emergency as the number of U.S. and global confirmed cases grew, while the Trump Administration said it would fall well short of its promise to have 1 million Covid-19 tests ready by the end of the week.

But investors seemed more shaken by domestic carrier Southwest Airlines (NYSE:LUV), which warned on first-quarter sales. Although other airlines have warned and canceled flights due to low demand, the hope had been the effects would be more concentrated on international carriers.

Southwest closed down 3.6%.

Dow component Boeing (NYSE:BA) fell 8%, taking more than 156 points off the Dow, on worries that plane orders could be delayed or canceled as the airline industry struggles.

Bonds rallied as money bounced back into safety and away from risk, sending the 10-Year Treasury Yield to a record low of 0.899% intraday, below 0.9% for the first time.

Although financials usually do well when yields fall, narrowing net interest margin, that benefit “is more than offset by the sharp drop in the overall levels of yields” and “weakening economic conditions can pressure the credit quality of banks’ loan books,” Allianz’s Mohamed El-Erian tweeted.

The financial sector was one of the worst performers of the day.

Also struggling were energy stocks, as oil prices dropped 2%. OPEC said it would like to cut production by a further 1.5 million bpd, but Russia has yet to agree.

Stocks: Dow Dives as See-Saw Action Keeps Going
 

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Comments (5)
Chris Sundo
Chris Sundo Mar 05, 2020 5:23PM ET
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Wall str is just happy it has a new pony it can ride up and down the hills with. 'Trade talks' was the last one. 'Greece bailout' was one too ..
taylor jason
taylor jason Mar 05, 2020 5:23PM ET
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neither the chinese trade war or Greek debt crisis resulted in an international demand shock such as this.
Jason Patcher
Jason Patcher Mar 05, 2020 5:23PM ET
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brexit was another
Dionicio Collado Raposo
Dionicio Collado Raposo Mar 05, 2020 4:35PM ET
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I do not understand why "financials do well when yields fall, narrowing net interest margin" . A narrowing net margin is bad for financial institutions. Could explain that.?
sir lancelot
sirlancelot Mar 05, 2020 4:23PM ET
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thats a better headline.  instead of saying, the markets went up because of biden, or down because of trump.  just call it what it is.  banks are taking money
bob hope
bob hope Mar 05, 2020 4:23PM ET
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Except markets going up is to be expected when a self described Democratic Socialist who wants to implement additional taxes on investing transactions fails to sweep Super Tuesday.
Herbert Booker
Herbert Booker Mar 05, 2020 4:13PM ET
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The bear enters the market by weekend.
Marius Nicoara
Marius Nicoara Mar 05, 2020 4:13PM ET
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wow 11 likes... new seen before
profit evolver
profit evolver Mar 05, 2020 4:12PM ET
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Coronavirus' shadow looms over emerging market currencies mkt effected, sell-off Open Tgts 18k -12k in Dowjone cmp 26k
 
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