Stocks plunged on Thursday, following a massive relief rally in the previous session, as markets remained choppy in the face of the fast-spreading coronavirus.
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Traders work on the floor of the New York Stock Exchange during the afternoon of April 17, 2015 in New York City. The Dow Jones Industrial Average plunged nearly 280 points, following overseas markets.
The Dow Jones Industrial Average dropped about 715 points, or 2.6%, around midday trading, after tanking 841 points earlier at its session low. The S&P 500 dropped a similar 2.5% and the Nasdaq Composite fell 1.9%.
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Fears about the coronavirus disrupting the global economy continued to grip Wall Street as countries around the world extended quarantines and travel restrictions. California declared a state of emergency after a coronavirus-related death and 53 confirmed cases in the state.
The market moves came amid a roller-coaster week on Wall Street, which saw the 30-stock Dow swinging 1,000 points or higher twice in the past three days. The Dow posted its second-biggest point gain on Wednesday as major wins from former Vice President Joe Biden during Super Tuesday sparked a relief rally, especially in the health-care sector. Investors also cheered signs of a global response to the outbreak, including a more than $8 billion in emergency funding from the Congress.
“Despite the rally in stocks, Treasury yields and gold prices did not respond in-kind,” said Matt Maley, chief market strategist at Miller Tabak. “None of the other markets saw the kinds of moves yesterday that would indicate that we’re out of the woods on the negative impact of the coronavirus. In other words, many other markets are still sending up warning signals.”
The yield on the 10-year Treasury note sank below 1% for the first time ever this week and remained below the threshold as of Thursday morning.
On Tuesday, the Federal Reserve cut its benchmark interest rate unexpectedly by 50 basis points, citing that coronavirus “poses evolving risks to economic activity.” It was the central bank’s first such emergency cut since the 2008 financial crisis.
The move failed to assuage stock market concerns about the potential economic impact of the coronavirus outbreak and triggered sharp movements in the markets.
“We’re nowhere near the sort of situation where the Fed should be acting like this,” Richard Harris, chief executive at Port Shelter Investment Management, told CNBC’s “Street Signs Asia” on Thursday morning.
“You have to wonder why (the Fed’s) acting like this and you have to wonder especially why they’re using their very, very sparse ammunition up — a 50 basis point cut — very early in a crisis,” Harris said.
—CNBC’s Fred Imbert and Michael Bloom contributed to this report.
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2020-03-05 16:55:00Z
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