Stocks are sinking again Wednesday, wiping out more than half of a huge rally from a day earlier as Wall Street continues to be hit by wild swings.
Another big central bank made an emergency cut to interest rates in hopes of blunting the economic pain caused by the coronavirus, which economists call the global economy’s biggest threat. But investors are still waiting for details promised by President Donald Trump on potential aid for the economy through tax breaks and other relief.
Stocks fell from the opening of trading in New York, including a 3% drop for the S&P 500. Perhaps the best gauge of confidence in the economy on Wall Street recently, Treasury yields, pulled back. Asian markets also fell, while European markets were steadier following the cut by the Bank of England.
The Dow Jones Industrial Average fell 808 points, or 3.2%, to 24,222, and the Nasdaq was down 2.5%.
The speed of the market’s declines and the degree of its swings the last few weeks have been breathtaking. It was only three weeks ago that the S&P 500 set a record high, and the Dow Jones Industrial Average has had six days where it swung by 1,000 points since then. It’s done that only three other times in history.
On the supply side, the worst-case scenario has companies with less things to sell as factories shut down and arenas dim the lights because workers are out on quarantine. On the demand side, companies see fewer customers because people are huddling at home instead of taking trips or going to restaurants.
That’s why many analysts say markets will continue to swing sharply until the number of new infections stops accelerating.
While investors wait for that moment, whenever it comes, they’re hoping big, co-ordinated moves by central banks and governments around the world can help prop up a virus-weakened economy.
The Bank of England’s emergency rate cut follows an earlier one by the Federal Reserve, and economists expect the European Central Bank to be the next to act. It has a meeting Thursday on monetary policy.
Italy’s government announced $28 billion in financial support for health care, the labour market and families and businesses that face a cash crunch due to the country’s nationwide lock down on travel.
Australia announced a $1.6 billion virus-fighting package and reportedly plans an additional $6.5 billion in economic stimulus. Japan and Thailand also have announced fresh help for businesses and workers.
European stock markets edged up Wednesday after Asian shares mostly declined, as governments were ramping up aid for economies reeling from the virus outbreak.
France’s CAC 40 gained 0.8% to 4,673, while Germany’s DAX rose 0.6% to 10,537. Britain’s FTSE 100 added 0.4% to 5,984. U.S. shares were set to open lower with Dow futures down 2.5% and S&P 500 futures 2.6% lower.
Japan’s benchmark Nikkei 225 lost 2.3% to finish at 19,416.06. Australia’s S&P/ASX 200 plunged 3.6% to 5,725.90. South Korea’s Kospi shed 2.8% to 1,908.27. Hong Kong’s Hang Seng fell 0.6% to 25,231.61, while the Shanghai Composite dipped 0.9% to 2,968.52.
