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Another black Monday as coronavirus response upends Wall Street

Stock MarketsMar 16, 2020 07:45PM ET
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By Caroline Valetkevitch

NEW YORK (Reuters) - Wall Street suffered its biggest drop since the crash of 1987 on Monday after unprecedented steps taken by the Federal Reserve, lawmakers and the White House to slow the spread and blunt the economic hit of the coronavirus failed to restore order to markets.

The S&P 500 tumbled 12%, closing at its lowest level since December 2018, despite the Fed's surprise move late Sunday to cut interest rates to near zero, its second emergency rate cut in less than two weeks and ahead of a scheduled policy meeting on Tuesday and Wednesday.

It was the third-largest daily percentage drop on record, beaten only by the 1987 "Black Monday" rout and the crash of October 1929.

That heightened alarm about the rapid spread of the pandemic and how it has paralyzed parts of the global economy and squeezed company revenue.

Investors appear increasingly worried about how effectively policymakers will be able to mitigate the economic damage from the spreading virus.

Stocks fell further late in the session as President Donald Trump urged Americans to halt most social activities for 15 days and not congregate in groups larger than 10 people, in a bold, new effort to reduce the spread of the coronavirus in the United States.

"There's nothing that can really give us a sense of when the full extent of the virus' impact will be known," said Jeffrey Kleintop, chief global investment strategist at Charles Schwab (NYSE:SCHW).

Trump also said the United States may be heading into a recession.

Most market watchers at this point are bracing for the likelihood that the economy is headed for a recession, but they said it is too early to know the full extent of the economic downturn.

Investors also are not yet convinced that all the rushed, panicked responses are gaining traction.

Bars, restaurants, theaters and movie houses in New York and Los Angeles were ordered shut, and U.S. states pleaded with the Trump administration to coordinate a national response to the outbreak.

Nike Inc (N:NKE), Under Armour Inc (N:UAA) and others said they would close stores in the United States and some other markets.

The Dow Jones Industrial Average (DJI) fell 2,997.1 points, or 12.93%, to 20,188.52, the S&P 500 (SPX) lost 324.89 points, or 11.98%, to 2,386.13. The Nasdaq Composite (IXIC) dropped 970.28 points, or 12.32%, to 6,904.59.

The S&P 500 lost $2.69 trillion in market capitalization for the day, according to S&P Dow Jones Indices, and the index is down 29.5% from its record high close on Feb. 19 and has lost$8.28 trillion in that time, based on S&P Dow Jones data.

Trading on Wall Street's three main stock indexes was halted for 15 minutes shortly after the open as the S&P 500 index (SPX) plunged 8%, crossing the 7% threshold that triggers an automatic cutout.

The real estate sector was the weakest out of the S&P 500's 11 major sectors with a 16.5% dive, which was its deepest one-day percentage drop since 2009. The smallest loser was consumer staples (SPLRCS) which sank 7% on the day.

The technology sector (SPLRCT) fell 13.9%, which was a record one-day decline for the sector that was the biggest driver of the bull market.

The Cboe Volatility Index (VIX), known as "Wall Street's fear gauge," ended the session at 82.69, its highest ever closing level.

Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis, speaking of the VIX, said the market was in "full panic mode."

"Until comfort returns, panic kind of dies down, I think we are going to continue to have big moves," he said.

Despite the intense volatility, the markets should stay open, the head of the U.S. securities regulator said, quashing speculation that the government might shut down the country's exchanges to stop the plunge in stock prices.

Lance Pan, director of investment research and strategy at Capital Advisors group in Newton Massachusetts, said that he was trying to calm clients on Monday and noted the extra problems people were having from working from home.

"We're flying blind and traders, even though they talk to each other, they may not see the body language, they have kids with them," he said.

Some 16.37 billion shares changed hands on U.S. exchanges compared with the 13.51 billion average for the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 14.68-to-1 ratio; on Nasdaq, a 11.64-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 341 new lows; the Nasdaq Composite recorded three new highs and 1,477 new lows.

Another black Monday as coronavirus response upends Wall Street
 

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Comments (10)
ATOMIQ ILYA
ATOMIQ ILYA Mar 16, 2020 5:34PM ET
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Btfd!
Mark Manley
Mark Manley Mar 16, 2020 5:32PM ET
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Why do they promote people like Klein top? Nothing that can give us a sense? How about WHO and CDC data, released every week, sometimes every day. I'm in these briefings every week, and what I hear didn't match the abject terror of the media and stock speculators. Data, people. Focus on the data. Not market data, epidemiologic data. And stop using the term "pandemic" wrong. Sheesh.
Paul Dunne
Paul Dunne Mar 16, 2020 12:23PM ET
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A more positive headline: "Europe pares losses: opened down 12% now down only 4%. There is hope!"
Jon Bal
Jon Bal Mar 16, 2020 12:00PM ET
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they're selling Mortimer!
Justin General
Justin General Mar 16, 2020 11:46AM ET
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ha! the market was BEGGING for the rate cut, look at the charts of what rate cuts they were pricing in. they got it and now they are spooked at getting what they were demanding!!
ATOMIQ ILYA
ATOMIQ ILYA Mar 16, 2020 11:46AM ET
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Too soon, too sharp, thank Trump
Bill Riley
Bill Riley Mar 16, 2020 10:29AM ET
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Ask our leaders, if everyone dying of this virus is over the age of retirement, why is everyone else staying home.
Hugo Garcia
Hugo Garcia Mar 16, 2020 10:29AM ET
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i think you should add to your middle name, ignorant? So you can warn,in advance, people when you write something. I hope you understand what i wrote, probably not...
Co Gonz
Co Gonz Mar 16, 2020 10:29AM ET
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you should learn how a virus spreads.. then xount how many doctors and hospitals we have in America to see if we can keep up with an outbreak of over 100,000 +
Nick Nah
Nick Nah Mar 16, 2020 10:20AM ET
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SPXU (inverse of SPY) is doing well today though. Bought some last week.
Tamra Murray
Tamra Murray Mar 16, 2020 10:14AM ET
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Do what others are not doing. Maybe if we go back to basics and buy cheap out of the money calls while selling our long positions of shares and sit back and ride out the storm. Remember what goes down eventually will course correct itself.
Andre Wu
Andre Wu Mar 16, 2020 10:14AM ET
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There is a reason why others are not doing it ....
john lim
john lim Mar 16, 2020 9:57AM ET
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Even Trump can't stop the Dow from falling.
Tijmen Goossens
Tijmen Goossens Mar 16, 2020 9:41AM ET
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this is ridiculous, this is like people think that no companies are working right now.-40% in 3 weeks isn't normal anymore. People can't think normal anymore
Mason Gregory
Mason Gregory Mar 16, 2020 9:41AM ET
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great excuse to buy more 🤷‍♂️
Mustansir Kushalgadhwala
Mustansir Kushalgadhwala Mar 16, 2020 9:41AM ET
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that's true, absolute panic!
Luis Rivera
Luis Rivera Mar 16, 2020 9:41AM ET
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dont care, it will rise and now I'm going to buy, in the EnD, equal more money
Bull Bear
Bull Bear Mar 16, 2020 9:41AM ET
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Was in a massive bubble for years before this drop down. Finding its true price again.
Justin General
Justin General Mar 16, 2020 9:41AM ET
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Bull Bear yup, and we will see if the fed and Trump "discourage" true price discovery like the fed has been doing for over a decade
 
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