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Stocks cratered on Monday, with the Dow Jones Industrial Average suffering its worst-ever loss on a point basis, as new developments in the coronavirus pandemic prompted Wall Street to prepare for the growing possibility of a deep recession amid a prolonged shutdown of public life.
The Dow dived by 2,997 points, or 12.93%, and tumbled to 20,188.52, closing at its lowest level since May 2017 after President Donald Trump warned the crisis may drag on well into the summer months. The sell-off represented the index’s biggest percentage decline since the “Black Monday” crash of 1987 — and the 2nd worst in its 100-plus year history — as well as its largest point decline on record.
Amid a day of heavy selling in which benchmarks tripped “circuit breakers” at the opening bell meant to curb losses, the S&P 500 and Nasdaq also posted steep losses, falling by 11.98% and 12.32%, respectively. The Nasdaq’s percentage decline was the worst on record, back to its creation in 1971.
Federal Reserve rescue no help
Stock futures had opened sharply lower Sunday evening, even after the Federal Reserve launched a massive monetary stimulus program that included cutting rates to effectively zero, and unveiling plans for large-scale asset purchases.
However, stock futures immediately indicated that Wall Street was in for a rough session, plunging to their “limit-down” levels established by CME Group daily to prevent further extreme losses. Each dropped more than 4%, with markets surmising that the coronavirus crisis would get worse before it got better.
“The Fed did what it had to do to ease financial conditions, but that's not going to change the trajectory of the economy,” said Eric Stein, co-director of global income at Eaton Vance Management.
“We are living in unprecedented historical times with the economy basically in shutdown mode,” he added. “Hopefully, at the margin, the central bank's liquidity injection can help dollar funding markets now.”
Specifically, the Fed slashed benchmark interest rates rates by 100 basis points to a band of between 0% and 0.25%. Underscoring the growing fears of a worldwide recession, the surprise announcement came just days ahead of the Fed’s scheduled March monetary policy meeting on Tuesday and Wednesday — and less than two weeks after the Fed had also unexpectedly cut rates by 50 basis points to a range of 1.00-1.25%.
Many market participants had expected the Fed would vote to cut rates to a zero lower bound for the first time since the financial crisis, but anticipated it would happen at this week’s meeting.
In a statement, the central bank said it intends to maintain the new target interest rate band “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
The Fed also unleashed a further set of tools to address the economic impact arising from COVID-19. It revived its crisis era quantitative easing program that would include purchases of $700 billion in assets, comprising $500 billion worth of treasuries and $200 billion in agency-backed mortgage securities.
Last week, the Fed had aggressively boosted its liquidity injections in repo operations by more than $1.5 trillion, and expanded its monthly purchases of Treasury securities to include those across all maturities.
White House, Congress, states respond to outbreak
In addition, the federal government has stepped up its response to the coronavirus, with President Donald Trump on Friday announcing a waiver on federal student loan payments until further notice, and massive crude oil purchases by the Department of Energy to fill the U.S. Strategic Petroleum Reserve “to the top,” to aid shale producers hit by the recent slump in oil prices.
In Congress, the House of Representatives passed a bipartisan bill to help provide further support in response to the coronavirus. The legislative package, which passed with a vote of 363-40, broadens access to free testing, expands sick leave benefits and helps provides food aid for vulnerable populations, including children whose schools have closed due to the coronavirus.
The Senate is expected to vote on the bill this week.
At the state level, the response has escalated with each passing day. New York Governor Andrew Cuomo announced Sunday that New York City’s public school system – the largest in the country with more than 1,800 schools – will begin closing this week in effort to slow the spread of the coronavirus. New York joins multiple other states in closing some or all public schools in recent days amid the outbreak.
New York City bars, cafes and restaurants will also be limited to offering takeout and delivery, effective Tuesday, Mayor Bill De Blasio said Sunday.
In California, Governor Gavin Newsom on Sunday called for the closure of all bars, nightclubs, wineries and brewpubs, and directed restaurants to slash their occupancy in half. And San Francisco on Monday announced a city-wide effort to keep residents inside in their homes as much as possible, except for conducting essential business.
Countries outside the U.S. have engaged in even more drastic measures to try and contain the outbreak.
In Spain — the 2nd worst hit country in Europe next to Italy — individuals are now banned from leaving their homes except for work and purchasing food and medical supplies. In France, another country facing a rising death toll from COVID-19, the government also moved to lock down its borders, with most food and entertainment establishments shutting their doors.
U.S.-based companies have also increasingly announced retail closures in an effort to encourage social distancing among consumers.
Nike (NKE) was one such company, announcing on Sunday that it will close all its Nike-owned stores in countries including in the United States, Canada, Western Europe, Australia, and New Zealand from March 16 through March 27. Peer retail giant Abercrombie & Fitch (ANF) also said it will be closing its stores outside of the Asia-Pacific region until March 28.
In another sweeping move by a major corporation, Apple (AAPL) said over the weekend it would be closing all of its retail stores outside of China until March 27. The announcement came just a day after the iPhone-maker reopened its stores in China, which had been closed for more than a month as COVID-19 spread across the country.
4:03 p.m. ET: Dow closes at lowest level since May 2017 after Trump says U.S. coronavirus response could last until August
Stocks closed near session lows, with each of the three major indices down at least 11.98%, after President Donald Trump said in a press conference Monday afternoon that the U.S. response to the coronavirus outbreak could last through July or August.
Here’s where the three majors closed at the end of regular trading:
S&P 500 (^GSPC): 2,386.13, down 324.89 points or 11.98%
Dow (^DJI): 20,188.52, down 2,997.1 points or -12.93%
Nasdaq (^IXIC): 6,904.59, down 970.28 or -12.32%
10-year Treasury (^TNX): yielding 0.737%, down 21.7 basis points
3:16 p.m. ET: San Francisco mayor calls for people to stay inside, except for procuring essential needs
San Francisco Mayor London Breed said in a Twitter post Monday that the city will “require people to stay at home except for essential needs,” effective at midnight.
Necessary government functions and essential stores will still remain opened, she added.
2:05 p.m. ET: S&P 500, Dow, Nasdaq each off more than 9%
Each of the three major indices sank by more than 9% during intraday trading, with less than two hours left of the regular session.
Shares of Boeing led declines in the Dow, with the aircraft manufacturer down 18.5%. The Home Depot also slumped sharply, off some 16.5% during intraday trading.
Here were the main moves in markets, as of 2:05 ET:
S&P 500 (^GSPC): 2,462.53, down 248.49 points or 9.17%
Dow (^DJI): 20,977.72, down 2,207.9 points or -9.52%
Nasdaq (^IXIC): 7,136.1, down 744.24 or -9.45%
Crude (CL=F): $28.59 per barrel, down $3.04 or -9.58%
Gold (GC=F): $1,498.40 per ounce, off -$18.30 or -1.21%
10-year Treasury (^TNX): yielding 0.724%, down 23 basis points
1:53 p.m. ET: Canada closes border to non-U.S. citizens over COVID-19 outbreak
Canadian Prime Minister Justin Trudeau, who has been in a self-imposed quarantine after his wife tested positive for coronavirus, announced Monday that Canada will be closing its border to non-citizens as the global pandemic continues.
U.S. citizens, air crews, diplomats and immediate family members of Canadian citizens will be exempt from the ban. The travel restrictions also do not apply to trade or commerce.
1:43 p.m. ET: Airlines request $50 billion in government grants and loans to weather coronavirus impact
Airlines for America, a group representing multiple major domestic airlines, said Monday that the industry will need $50 billion in grants and loans in order to cope with lost travel revenue due to the coronavirus outbreak.
The group noted that major passenger airlines could run out of money by the end of the year due to reduced travel demand from the global pandemic, and that a 30-day domestic travel ban, if implemented, could generate as much as $10 billion in further lost revenue for carriers.
1:16 p.m. ET: UK Prime Minister Boris Johnson urges UK to avoid non-essential travel
UK Prime Minister Boris Johnson said Monday that citizens should avoid all non-essential contact and travel. Speaking during a press conference Monday, he urged Brits to start working from home and stay away from bars, clubs, theaters and other social venues, according to media reports of the remarks.
The remarks come just hours after the European Union announced its own measures to restrict nonessential travel into the region, effective for at least 30 days, according to European Commission President Ursula von der Leyen.
12:12 p.m. ET: Fed to offer $500 billion in another overnight repurchase operation
The Federal Reserve said Monday it would be injecting hundreds of billions more in short-term funding to financial markets with another repurchase operation (repo).
The New York Fed intends to conduct an additional repo operation for same-day settlement today from 1:30 p.m. to 1:45 p.m. ET, “conducted for up to an aggregate offered amount of $500 billion with a minimum bid rate of 0.10%,” the New York Fed said in a statement.
Last week, the New York Fed had offered some $1.5 trillion in similar operations, intended to add liquidity to and ensure the smooth functioning of U.S. dollar money markets.
11:51 a.m. ET: Wells Fargo sees U.S. economy entering a ‘sharp, albeit short-lived recession’
Wells Fargo economists said they expect U.S. economic activity will contract in the second and third quarters of 2020, thereby entering a recession with two consecutive quarters of negative growth.
The economists, led by Sam Bullard, said they expect second-quarter U.S. real gross domestic product to contract at an annualized pace of 3.3%, followed by a contraction of 2.3% in the third quarter. Such a result would bring full-year GDP down to just 0.5% growth, the weakest pace since 2009, according to the economists. Previously, the economists saw full-year 2020 GDP growth of 1.4%.
“We have updated our economic forecast and now project the U.S. economy to enter a sharp, albeit short-lived recession,” the economists said in a note.
“We look for GDP growth to slowly recover in the second half of the year, as the twin shocks dissipate (COVID-19 and oil prices) and in response to substantial fiscal stimulus,” they added. “The uncertainty around our forecast is much greater than normal. The path of the U.S. economy will largely depend on how the COVID-19 outbreak evolves, which is highly uncertain.”
11:34 a.m. ET: Here’s which stocks are up as everything else crashes
Whether or not today’s trading session becomes the new ‘Black Monday’ remains to be seen, but certain stocks are actually posting gains amid the market’s carnage. Among the more notable names are:
Peloton (PTON): up over 2% after having hit a record low. New York, New Jersey and Connecticut’s joint action to shutter gyms boosted the at-home exercise company;
Clorox (CLX): Consumers newly-discovered obsession with germs (for obvious reasons) is boosting the household cleaning products giant. The stock is up over 4%;
Zoom (ZM) jumps by over 7%, with many white-collar workers working from home and needing to use video conferencing tools;
Moderna (MRNA), one of a handful of companies on the frontlines of developing a coronavirus vaccine, is spiking by nearly 20%.
11:08 a.m. ET: Stocks pare some losses but still hold at least 7% lower
Here were the main moves in markets, as of 11:08 a.m. ET:
S&P 500 (^GSPC): 2,512.40, down 198.62 points or 7.33%
Dow (^DJI): 21,341.27, down 1,844.35 or -7.95%
Nasdaq (^IXIC): 7,295.55, down 579.32 or -7.36%
Crude (CL=F): $29.73 per barrel, down $2.00 or -6.3%
Gold (GC=F): $1,487.40 per ounce, off -$29.30 or -1.93%
10-year Treasury (^TNX): yielding 0.851%, down 20.4 basis points
10:43 a.m. ET: Supreme Court postpones oral arguments through March session due to coronavirus
The Supreme Court said Monday it will postpone oral arguments currently scheduled for the March session, “in keeping with public health precautions recommended in response to COVID-19,” according to a statement.
The postponement impacts oral arguments previously scheduled for March 23 to March 25, and March 30 to April 1. The U.S. Supreme Court building has been closed to the public since last week.
“The Court’s postponement of argument sessions in light of public health concerns is not unprecedented. The Court postponed scheduled arguments for October 1918 in response to the Spanish flu epidemic,” according to the statement. “The Court also shortened its argument calendars in August 1793 and August 1798 in response to yellow fever outbreaks.”
10:26 a.m. ET: NY Governor Andrew Cuomo announces joint action between New York, Connecticut and New Jersey to reduce spread of coronavirus
New York Governor Andrew Cuomo on Monday announced expanded efforts to help stem the spread of COVID-19, including further reductions of public crowd capacities and closures for more types of businesses.
9:50 a.m. ET: S&P 500 extends losses to 11.4% after trading resumes
The S&P 500 tumbled again after trading resumed at the end of a 15-minute halt. At the lows of the session so far, the index was down as much as 11.4% to 2,401.57.
9:36 a.m. ET: These are the S&P 500 levels to watch during Monday’s session to trigger further “circuit breakers”
The S&P 500 plummeted enough to invoke a trading halt just as markets opened for the regular cash session at 9:30 a.m. ET. This first halt, triggered after the index fell more than 7% from the prior session’s close, will last for 15 minutes.
Further trading halts will be triggered if the S&P 500 falls to the following levels once trading resumes:
Level 2: 2,358.58 (13% drop from Friday’s close) – 15 minute halt
Level 3: 2,168.81 (20% drop from Friday’s close) – trading will close for the rest of Monday’s regular session
9:30 a.m. ET: S&P 500 opens more than 8% lower, triggering trading halt
The S&P 500 sank more than 8% just as markets opened for trading, immediately triggering a 15-minute “circuit breaker” trading halt on the New York Stock Exchange intended to prevent further extreme losses.
Here were the main moves in markets, as of 9:30 a.m. ET:
S&P 500 (^GSPC): 2,490.47, down 220.55 points or -8.14%
Dow (^DJI): 20,935.16, down 2,250.46 or -9.71%
Nasdaq (^IXIC): 7,392.73, down 482.15 or -6.12%
Crude (CL=F): $28.96 per barrel, down $2.77 or -8.73%
Gold (GC=F): $1,461.30 per ounce, off -$55.40 or -3.65%
10-year Treasury (^TNX): yielding 0.753%, down 20.4 basis points
9:15 a.m. ET: Goldman Sachs sees risk of S&P 500 slumping to 2,000 before recovering
via Julia La Roche, Yahoo Finance Correspondent
Goldman Sachs sees potential for the S&P 500 (^GSPC) to drop to 2,000, down 41% from the all-time high, before rebounding to end 2020 at 3,200 as the impact of the coronavirus (COVID-19) roils markets.
"The swiftness of the bear market has unsettled many young market participants," Goldman's chief equity strategist David Kostin wrote in a note on March 13. “In contrast, veteran investors recalled the rout of Black Monday (October 19, 1987) – when stock prices collapsed by more than 20% in a single day. The lesson of prior event-driven bear markets is that financial devastation ultimately allows a new bull market to be born.”
Last week after an 11-year bull market run, the Dow Jones Industrial Average (^DJI) officially entered a bear market, marked by a 20% drop from its most recent high. The S&P fell into a bear market the following day.
9:09 a.m. ET: New York Fed manufacturing survey shows early impact of COVID-19 outbreak on U.S. economy
The New York Federal Reserve’s monthly manufacturing survey showed a much sharper than expected decline in business conditions in March, underscoring the coronavirus’s early impact on the domestic economy.
The headline business conditions index slumped 34 points to -21.5, hitting the lowest level since 2009. Consensus economists had expected the print to come in at 4.9, according to Bloomberg data.
Beneath the headline index, the new orders index sank to -9.3 and the shipments index fell to -1.7, as delivery times lengthened and inventories rose. Employment flattened out and the average hours worked per week fell, according to the New York Fed.
“Optimism about the six-month outlook fell sharply, with firms less optimistic than they have been since 2009,” the regional Fed said in a statement.
7:52 a.m. ET: Asia stocks tumble after China data points to deeper than expected economic contraction during outbreak
Stocks in Asia were sharply lower Monday, with the Shanghai Composite down 3.4% and Hang Seng Index down 4% during the session after data from China revealed deeper than expected contractions in the country’s key industries amid the coronavirus outbreak.
China’s industrial output slumped 13.5% for the January through February period, according to the National Bureau of Statistics, coming in well below the decline of just 3.0% expected, according to Bloomberg data. This was the weakest reading since January 1990, according to Reuters.
Retail sales for the first two months of the year slid 20.5%, versus a decline of 4.0% expected. And fixed asset investment was similarly week, dropping 24.5% versus a drop of 2.0% expected.
The unemployment rate in the country surged to 6.2% in February, the highest reading on record, as millions lost their jobs due to the COVID-19 outbreak and ensuing business disruptions. The unemployment rate in China was 5.2% in January.
7:00 a.m. ET Monday: S&P 500, Dow and Nasdaq contracts stay pinned to “limit down”
Futures for each of the three major indices languished at their lower-bound limits in early trading, suggesting investors were in for another session of heavy selling Monday.
Here were the main moves in markets, as of 7:00 a.m. ET Monday morning:
S&P 500 futures (ES=F): 2,567.50, down 128.5 points or -4.77%
Dow futures (YM=F): 21,947.00, down 1,041.00 points or -4.53%
Nasdaq futures (NQ=F): 7,556.00, down 359.75 points or -4.54%
Crude oil (CL=F): $29.94 per barrel, down $1.79 or 5.64%
Ten-year Treasury note: yielding 0.786%, down 16.8 basis points
6:01 p.m. ET Sunday: Stock futures sink after Fed cuts rates to zero
Stock futures sank at the start of overnight trading, showing few signs of respite from selling even after the Federal Reserve’s unexpected rate cut.
Here were the main moves in markets, as of 6:01 p.m. ET:
S&P 500 futures (ES=F): 2,598.00, down 86 points or -3.2%
Dow futures (YM=F): 22,289.00, down 550 points or -2.4%
Nasdaq futures (NQ=F): 7,628.5, down 272.25 points or -3.45%