U.S. Stocks Extend Sell-Off, Dow Has Worst Day Since 1987 Crash

Following the sharp pullback seen in the previous session, stocks showed another substantial move to the downside during the trading day on Thursday.

With the sell-off on the day, the Dow recorded its biggest one-day percentage drop since the stock market crash of 1987 and the Nasdaq and the S&P 500 joined the blue chip index in bear market territory.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow plummeted 2,352.60 points or 10 percent to 21,200.62, the Nasdaq plunged 750.25 points or 9.4 percent to 7,201.80 and the S&P 500 tumbled 260.74 points or 9.5 percent to 2,480.64.

Concerns about the impact of the coronavirus continued to weigh on the markets after President Donald Trump addressed the nation about the outbreak last night.

Trump was likely seeking to calm the markets but instead exacerbated concerns by announcing a ban on all travel from Europe to the U.S. for the next 30 days.

The president’s remarks also created some confusion, as he initially said the prohibitions would apply to trade and cargo before subsequently tweeting that trade “will in no way be affected.”

Trump also announced plans to address the economic impact of the outbreak, although some investors have complained about a lack of specifics.

Reflecting the widespread impact of the outbreak, the NBA, the NHL, and Major League Soccer have all suspended their seasons and Major League Baseball has delayed opening day.

Additionally, Oscar-winning actor Tom Hanks revealed that he and his wife, actress Rita Wilson, have tested positive for the coronavirus.

Stocks briefly fluctuated but remained sharply lower in afternoon trading after the Federal Reserve announced significant steps to provide liquidity to the financial markets.

The New York Fed said that it will offer banks more than $1 trillion worth of additional short-term cash loans as part of an effort to smooth operations in the Treasury and money markets.

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said in a statement.

In addition to pumping substantial amounts of money into the banking system, the Fed said it will extend its monthly purchases of $60 billion worth of Treasury securities across a range of maturities beyond just short-term T-bills.

The Fed has also scrapped plans to wind those purchases down in what some see as step toward a formal re-adoption of quantitative easing.

Sector News

Most of the major sectors showed substantial moves to the downside on the day, reflecting another broad based sell-off on Wall Street.

Energy stocks turned in some of the market’s worst performances once again, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index plunging by 15.2 percent and 13.5 percent, respectively.

The continued weakness among oil stocks comes as the price of crude oil for April delivery tumbled $1.48 to $31.50 a barrel.

Particular weakness was also visible among steel stocks, as reflected by the 12.6 nosedive by the NYSE Arca Steel Index. The index plummeted to its lowest closing level in four years.

Gold stocks also saw significant weakness amid a steep drop by the price of the precious metal, moving sharply lower along with brokerage, housing, semiconductor and utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Thursday. Japan’s Nikkei 225 Index plunged by 4.4 percent, while China’s Shanghai Composite Index tumbled by 1.5 percent.

The major European markets also tanked, recording their worst one-day drop in history. While the U.K.’s FTSE 100 Index cratered by 10.9 percent, the German DAX Index and the French CAC 40 Index nosedived by 12.2 percent and 12.3 percent, respectively.

In the bond market, treasuries once again turned lower over the course of the session after seeing initial strength. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 0.849 percent.

Looking Ahead

Reports on import and export prices and consumer sentiment are due to be released on Friday but are likely to be overshadowed by the latest developments regarding the coronavirus.

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