Reuters | Mar 16, 2020 16:09
By Sanjana Shivdas and Medha Singh
(Reuters) - U.S. stock indexes plunged about 7% on Monday, as the Federal Reserve's drastic interest rate cut to near zero stoked fears of a coronavirus-driven recession.
Trading on Wall Street's three main stock indexes was halted for 15 minutes shortly after the open, the third such pause in six days, as the S&P 500 index (SPX) plunged 8%, triggering an automatic cutout.
The benchmark index slid as much as 11.4%, shedding about $2 trillion in market value, before bargain hunting helped the indexes claw back some losses.
A sharp cut in interest rates by the Federal Reserve ahead of schedule and its pledge of massive asset purchases added to the alarm about the pandemic that has paralysed supply chains and squeezed company revenue.
"It's not just about a reduction in earnings growth, or that you will have not have earnings growth. There's credit concerns and cashflow concerns, that's why the Fed acted," said Tom Martin, senior portfolio manager at GlobAlt Investments in Atlanta.
"You have a lot of evidence that things are still in the process of getting bad and we don't really know how bad."
Underscoring the economic blow of the outbreak, severe virus containment measures sent China's factory production tumbling at its fastest pace in three decades.
Rate-sensitive financial stocks (SPSY) plunged 9.3%, leading declines among the major S&P sectors. The sector also came under pressure after the big U.S. banks said they would stop buying back shares.
Wall Street's fear gauge (VIX) jumped 17.24 points to 75.29.
As bars, restaurants, theatres and movie houses in New York and Los Angeles were ordered shut, U.S. states pleaded with the Trump administration to coordinate a national response to the outbreak.
At 11:35 a.m. ET, the Dow Jones Industrial Average (DJI) was down 1,777.46 points, or 7.67%, at 21,408.16, the S&P 500 (SPX) was down 185.29 points, or 6.83%, at 2,525.73. The Nasdaq Composite (IXIC) was down 531.40 points, or 6.75%, at 7,343.48.
Declining issues outnumbered advancers for an 11.97-to-1 ratio on the NYSE and an 8.07-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and 322 new lows, while the Nasdaq recorded three new highs and 1,182 new lows.
Another 2,000-point drop for the Dow will wipe out the entire Trump-bump, taking the index to levels seen before the presidency of Donald Trump.
The S&P 1500 airlines index <.SPCOMAIR> slumped 8.1% as United Airlines Holdings Inc's (O:UAL) March revenue fell $1.5 billion and the airline warned employees that planes could be flying nearly empty into the summer.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.
More content, faster quotes and charts, and a smoother experience is available only on the App.