NBC NEWS/Lucy Bayly
Trading halted on Wall Street after stock plunge triggers ‘circuit breaker’
March 12, 2020
“The Dow Jones Industrial Average fell by 1,700 points Thursday morning after President Trump’s long-awaited response to the coronavirus epidemic triggered a massive sell-off on Wall Street. The S&P 500 plunged by 7%, triggering a circuit breaker, which halts all trading on the New York Stock Exchange for 15 minutes. All three major averages sank after Trump’s address Wednesday night failed to satisfy traders who were hoping for more concrete steps to allay any economic slowdown from the viral outbreak.
Trading was actually halted twice on Thursday morning, the first time after all three major averages sank below the 5 percent ‘limit down’ marker in premarket activity. In his address from the Oval Office, Trump announced he would be halting all inbound flights from Europe in an effort to limit the spread of the coronavirus. That created immediate panic as Americans abroad rushed to buy last-minute tickets home, and also fueled trader concern that suspended travel and trade between the U.S. and the European Union would come at a steep economic cost. Travel stocks continued their double-digit plunge, with airlines and hotels hardest hit.”
KITCO NEWS/Jim Wyckoff
Gold down as traders sell what they can amid panicked marketplace
March 12, 2020
“Gold prices are lower in early trading Thursday as markets liquidity in a panicky global marketplace is drying up as traders and investors back away from trading markets. ‘When in doubt, get out’ is the mantra today. U.S. stock index futures are presently locked limit down ahead of the opening of the New York day session. Silver prices are sharply down and hit an eight-month low. April gold futures were last down $16.30 an ounce at $1,625.70.
Global stock markets were sharply lower overnight. U.S. stock indexes are now in bear market territory—down more than 20% from their peaks that occurred just last month. The Covid-19 pandemic has the global marketplace in panic. President Trump’s Oval Office speech to the American citizens Wednesday night seemed to cause further unease in the markets when he announced no major economic stimulus measures. On Wednesday evening the NBA basketball league suspended its season after a player contracted coronavirus … and movie stars Tom Hanks and his wife announced on Twitter they have tested positive for the illness. There are also scattered reports the U.S. Treasury markets are becoming stressed.”
BUSINESS INSIDER/Theron Mohamed
‘Can we panic now?’: Stocks, oil, bitcoin, and Treasury yields plunge after Trump’s coronavirus plan failed to calm investors
March 12, 2020
“Stocks, oil, bitcoin, and Treasury yields plunged Thursday, the morning after the World Health Organization declared the novel coronavirus a pandemic and President Trump gave a nationally televised address from the Oval Office. Trump announced travel restrictions from most of Europe to the US for 30 days starting Friday. He also pledged to provide financial aid to affected Americans and promised capital and liquidity for small businesses, but offered few details. Travel and leisure stocks were among the hardest hit. Boeing slumped 18%, Royal Caribbean Cruises and Expedia dropped 14%, and American Airlines, United Airlines, and MGM Resorts all slumped 13%.
‘The biggest source of disappointment on Wall Street was the lack of specific ways to support people and small- and medium-sized enterprises,’ Jasper Lawler, the head of research at London Capital Group, said in a morning note. ‘Paid sick leave, free testing, and a solution for uninsured Americans were all missing,’ he added. Other analysts expressed similar sentiments. ‘Donald Trump’s public address fell short of what investors were hoping for,’ Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said. They were expecting more, she added, saying the coronavirus threatens ‘one of the severest economic meltdowns we have experienced over the past decades.’”
World Economy Powering Down Makes Recession More Likely
March 12, 2020
“A pandemic-driven global recession is becoming more likely by the day as the flow of goods, services and people face ever-increasing restrictions. In just the past day or so, President Trump curbed travel to the U.S. from Europe, Italy’s government ordered almost every shop to close and India suspended most visas. Twitter Inc. joined the flood of companies telling employees to work at home and the NBA suspended its season.
While such announcements are aimed at containing the coronavirus, each quarantined city, canceled flight, scrapped sporting event and scuppered conference will hammer demand across the globe this quarter and likely longer. An initial consumer rush to stock up on supplies may be followed by months of cautious restraint. ‘The resulting pandemic of fear continues to spread and is bound to cause a global recession,’ Ed Yardeni, president Yardeni Research wrote in a research note. Dashed are the hopes that the world economy would track a V-shaped trajectory — a sharp first-quarter slump in growth followed by a second-quarter rebound. Now, the biggest shock since the 2008 financial crisis is raising the risk of a worldwide recession, with the debate shifting to deep the slump will be.”
MARKET WATCH/ Alessandra Malito
There’s a pandemic. The market is falling. Do this instead of checking your 401(k)
March 12, 2020
“Stock market volatility can be normal, but it’s also unnerving — and for some investors, it’s just impossible to stomach. The Dow Jones Industrial Average, one of Wall Street’s major stock benchmarks, dropped more than 20% from its all-time high in February, and entered bear market territory on Wednesday. This benchmark, as well as others, have been in an overall bull market since the financial crisis in 2008-09, but it has been experiencing extreme volatility, in part because of oil price wars and fears of the spreading coronavirus derailing global economies. The S&P 500 and Nasdaq Composite from their all-time closing highs in February.
Naturally, this might stress some investors out — especially in regards to the nest egg they’re building for their retirement through a 401(k) plan or individual retirement account. Instead of logging in to their accounts to check on 401(k) balances — which may cause even more stress — investors should check in on their risk tolerance. ‘These last few weeks have been a test of the fortitude that investors have,’ said Aaron Klein, co-founder and chief executive officer of Riskalyze, a technology company with a program for financial advisers to assess clients’ capacity for risk. Risk tolerance is the level of exposure to loss that an investor can handle, especially during nerve-wrecking ups and downs in the market. Many investment firms, financial advisers and automatic online investing platforms try to gauge investors’ risk tolerance by asking them simple questions.”
THE WALL STREET JOURNAL/Nicole Friedman
Coronavirus Looms Over Crucial Spring Season for Housing Market
March 12, 2020
“The lowest mortgage rates on record are colliding with the prospect of an economic downturn prompted by the coronavirus outbreak, setting the stage for an unpredictable spring selling season in the housing market. Early indications suggest that rock-bottom borrowing costs may not be enough to lure many home buyers amid the current uncertainty. Economists are tamping down earlier expectations that cheap rates and a strong job market would boost the housing market in 2020 following years of sluggish growth. The National Association of Realtors had anticipated about 5.5 million sales of previously owned homes in 2020, up from 5.3 million a year in 2019 and 2018.
‘I thought that there would be a steady increase from January pretty much throughout most of the year,’ said the NAR’s chief economist. ‘Obviously, we hit a major speed bump’ due to the epidemic. The association said Monday it expected a 10% near-term drop in home sales in the next month, compared with the period before the virus became prominent. In a survey of its members about the coronavirus, the association said 11% of respondents reported lower home-buyer traffic and 7% reported lower home-seller traffic. The spring months are crucial for home sales, as buyers look to move into new homes before the start of the school year. About 40% of annual sales take place from March through June.”