Trading suspended on Wall Street
The New York Stock Exchange has suspended trading for the second time this week following steep losses linked to coronavirus fears.
The latest 15 minute "circuit breaker" was triggered when the S & P 500 dropped about 7 per cent within the first few minutes of Thursday's trading on the New York Stock Exchange.
It was the second time this week the plunge was steep enough to bring the automatic halt into effect. The system was first adopted after the 1987 crash, and until this week hadn't been activated since 1997.
The sell-off bludgeoning global financial markets is tied to concerns that the White House and other authorities around the world can't or won't do what's needed to combat the coronavirus pandemic.
The Dow Jones Industrial Average plummeted more than 2,250 points, or nearly 9.7 per cent, at one point on Thursday morning but started climbing back after the Federal Reserve announced it would step in to the bond market to address "highly unusual disruptions" in trading of Treasury securities. The dramatic moves sent US stocks surging off their worst levels of the day. At one point, the Dow was on track for its worst day since 1987. More recently, the Dow was only down 900 points, or 4 per cent.
After the Dow Jones Industrial Average closed in a bear market for the first time in more than a decade on Wednesday, President Donald Trump announced that afternoon he would restrict travel to the US from Europe in hopes of containing the virus.
It's the latest hit for an airline industry already battered by frightened travellers cancelling plans, and market losses accelerated around the world as Mr Trump spoke while giving few details about a big stimulus program that could help.
The S&P 500 index has declined by 7%, triggering a Level 1 Market Wide Circuit Breaker trading halt. US equity markets will resume after 15 minutes.— NYSE 🏛 (@NYSE) March 12, 2020
The index is set to join the Dow in entering a bear market after losing more than 20 per cent from its record set last month, and one of the greatest eras in Wall Street's history is crumbling.
The damage was worldwide and eye-popping. European stocks tumbled 8 per cent, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.
US equity markets have resumed trading following the Market Wide Circuit Breaker trading halt— NYSE 🏛 (@NYSE) March 12, 2020
In Thailand and the Philippines, stocks fell so fast that trading was temporarily halted. Japan's Nikkei 225 sank to its lowest close in four years.
Not only has the degree of the market's drop in recent weeks been breathtaking, so has its speed.
If the S & P 500 remains under 2,708.92, which looks very likely, it would be the fastest that the index has fallen from a record to a bear market since World War II, according to CFRA.
It was just two days ago that the S & P 500 soared nearly 5 per cent amid hopes that big stimulus from the US government could arrive soon to help cushion the economic blow from the virus.
Mr Trump's pitch for a cut in payroll taxes has hit resistance on Capitol Hill, though, and hopes dissipated after the president's Wednesday remarks from the Oval Office, where he blamed the "foreign virus". "The market judgment on that announcement is that it's too little too late," said Michael McCarthy of CMC Markets. "And while travel restrictions on people coming from Europe are good from a health point of view, from the point of view of the economy, it's very, very bad news."
Investors know that stimulus from governments and central banks around the world won't solve the COVID-19 crisis, which global health authorities declared a pandemic Wednesday. Only the containment of the virus can do that.
But those measures could help support to the economy in the meantime, and investors fear things would be much worse without them.
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.
The vast majority of people recover from the new virus, but the fear is that COVID-19 could drag the global economy into a recession as quarantines and other measures force companies to close shop and worries about the virus scare customers away.
Many analysts say markets will continue to swing sharply until the number of new infections stops accelerating.
More than 126,000 people in more than 110 countries have been infected.
Treasury yields, which were one of the first markets to sound the alarm on the economic risks of the virus, fell in morning trading. The yield on the 10-year Treasury fell to 0.67 per cent from 0.82 per cent late Wednesday.
- With AP