Worst day on Wall Street since 1987 as virus fears spread
The escalating coronavirus emergency sent the stock market on Thursday into its worst slide since the Black Monday crash of 1987, extending a sell-off that has now wiped out most of Wall Street's big gains since US President Donald Trump took office.
The S&P 500 plummeted 9.5 per cent, for a total drop of 26.7pc from its all-time high, set just last month. That puts it way over the 20pc threshold for a bear market, officially ending Wall Street's unprecedented bull-market run of nearly 11 years. The Dow Jones Industrial Average sank 2,352 points, or 10pc, its heaviest loss since its nearly 23pc drop on Oct 19, 1987.
European markets fell 12pc in one of their worst days ever, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.
The rout came amid a cascade of cancellations and shutdowns across the globe including Trump's suspension of most travel to the US from Europe and rising worries that the White House and other authorities around the world can't or won't counter the economic damage from the outbreak any time soon.
"We're starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn't get better, it gets worse. It's now hit Main Street to a more significant degree," said Liz Ann Sonders, chief investment strategist at Charles Schwab.
Stocks fell so fast on Wall Street at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week. The so-called circuit breakers were first adopted after the 1987 crash, and until this week hadn't been tripped since 1997.
The Dow briefly turned upward and halved its losses at one point in the afternoon after the Federal Reserve announced it would step in to ease highly unusual disruptions in the Treasury market. But the burst of momentum quickly faded. Trump often points proudly to the big runup on Wall Street under his administration, warning a crowd at a rally last August that "whether you love me or hate, you gotta vote for me," or else your 401(k) will go down the tubes.
Just last month, the Dow was boasting a nearly 50pc increase since Trump took the oath of office on Jan. 20, 2017. By Thursday's close, the Dow was clinging to a 6.9pc gain, though it was still up nearly 16pc since just before Trump's election in November 2016.
The Dow officially went into a bear market on Wednesday, when it finished the day down more than 20pc from its all-time high. For the S&P 500, this is the fastest drop since World War II from a record high to a bear market.
The combined health crisis and retreat on Wall Street heightened fears of a recession.
"This is bad. The worst and fastest stock market correction in our career," Chris Rupkey, chief financial economist at MUFG Union, said in a research note overnight. "The economy is doomed to recession if the country stops working and takes the next 30 days off. The stock market knows it."
The coronavirus has infected around 128,000 people worldwide and killed over 4,700. The death toll in the US climbed to 39, with over 1,300 infections. For most people, the virus 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 illnesses, including pneumonia. The vast majority of people recover from the virus in a matter of weeks.
The fallout mounted on Thursday, as the NCAA cancelled its men's and women's basketball tournaments, major league baseball postponed opening day, and Disneyland announced it is shutting down. Even Mount Everest closed.