WALL STREET SUFFERS WORST DAY SINCE 1987
NEW YORK — The escalating coronavirus emergency sent the stock market 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 President Donald Trump took office.
The S&P 500 plummeted 9.5%, for a total drop of 26.7% from its all-time high, set just last month. That puts it way over the 20% 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 10%, its heaviest loss since its nearly 23% drop on Oct. 19, 1987.
European markets fell 12% 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.
Late Thursday, shares plunged in Asia, with Japan’s benchmark index sinking 10%.
The rout came amid a cascade of cancellations and shutdowns across the globe — including Trump’s suspension of most travel to the U.S. 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 run-up 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 50% increase since Trump took the oath of office on Jan. 20, 2017. By Thursday’s close, the Dow was clinging to a 6.9% gain, though it was still up nearly 16% since just before Trump’s election in November 2016.
The Dow officially went into a bear market on Wednesday, when it closed the day down more than 20% 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 U.S. climbed to 39, with over 1,300 infections.
Pelosi says deal close
House Speaker Nancy Pelosi announced late Thursday that she and the Trump administration are close to agreement on a coronavirus aid package to reassure anxious Americans by providing sick pay, free testing and other resources.
Final details were being worked out, but the top House Democrat, who held daylong talks with Treasury Secretary Steven Mnuchin, expected an announcement Friday. The House could then swiftly vote.
“We have — are near — to an agreement,” Pelosi said, emerging from her office at the Capitol shortly before 9 p.m.
Trump angers European Union
The European Union pushed back against Trump’s sharp restrictions on travel from Europe to the United States announced in his Oval Office address Wednesday night. The EU quickly slammed Trump’s “unilateral” decision, declaring the virus a “global crisis, not limited to any continent, and it requires cooperation.”
Trump defended his decision to not notify all EU leaders ahead of the announcement. “When they raise taxes on us, they don’t consult us,” Trump said. “I think that’s probably one in the same.”
In Italy’s Lombardy region, the virus’ European epicenter, hospitals were overwhelmed with both the sick and the dead. The nation with the second-oldest population in the world, behind Japan, has seen its fatality rate reach more than 6%, far higher than other countries. As of Thursday, Italy had 15,113 positive cases and 1,016 fatalities. New cases are declining in China and South Korea.