INVESTORS FEAR THAT EVEN DRAMATIC STIMULUS WILL NOT BE ABLE TO AVERT A DEEP RECESSION

Trading HALTS as Dow plunges 1,600 points and erases ALL of the gains since Trump's inauguration as markets anticipate total economic breakdown from coronavirus

By Keith Griffith

Daily Mail
March 18, 2020

U.S. stock indexes have dropped below the levels they were at upon President Donald Trump's inauguration, erasing all of the market gains of his presidency.

At 12.45pm on Wednesday, the Dow Jones Industrial Average was down 1,506.15 points, or 7.09 percent, at 19,731.23. On January 20, 2017, the index closed at 19,827.25.

Around 1pm, all trading was halted for 15 minutes after the S&P 500 dropped more than 7 percent for the session, triggering the 'circuit breaker' that pauses trading.

The steep recent plunge in markets has come as investors priced in a complete breakdown in business activity and consumer spending from the coronavirus pandemic.

'We're just in panic mode here,' said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

It is the latest wild swing in the markets, after Wall Street's worst trading day since 1987 on Monday, and a 1,000-point surge for the Dow on Tuesday. It was the seventh day in a row that the Dow moved at least 1,000 points either up or down.

Boeing Co fell another 17 percent in premarket trading as the planemaker called for a $60 billion bailout for U.S. aerospace manufacturers facing the fallout of an extended collapse in global travel.

'The fear of, maybe, deflation setting in, is probably one of the reasons why the market is acting the way it is.'

Wall Street's main indexes had bounced on Tuesday from a massive selloff a day earlier, as the Trump administration pressed for a $1 trillion stimulus package to ward off the pressure of business closures to contain the virus.

Treasury Secretary Steven Mnuchin said Trump wants to send checks to Americans in the next two weeks to help support them while more parts of the economy come closer to shutting down.

The Federal Reserve has also announced more measures to keep financial markets operating, including another $500 billion liquidity injection announced on Tuesday.

However, investors fear that even dramatic stimulus will not be able to avert a deep recession as the COVID-19 disease continues to spread rapidly across the globe and estimates for the duration of the damage extend out into the summer.

The virus has spread so quickly that its effects haven´t shown up in much U.S. economic data yet.

On Tuesday, a report showed retail sales weakened in February, when economists expected a gain. A separate report a day earlier showed manufacturing in the state of New York contracting.

'The global recession is here and now,' S&P Global economists wrote in a report Tuesday.

In the latest signs of corporate stress, FedEx Corp slumped 4.2 percent after suspending its 2020 profit outlook and announcing cost cuts.

Even Cheerios maker General Mills Inc, which raised its profit forecast citing bulk-buying of its products, fell 6 percent, while the main U.S. airlines dropped between 5.7 percent and 9.3 percent.

Boeing, just a year ago seen as a perpetual growth stock and a symbol of U.S. tech and industrial power, has now lost more than 60 percent of its value this quarter and the market overall has fallen by around a third.

At 7.24am, Dow futures were down 821 points, or 3.92 percent and Nasdaq 100 futures were down 328 points, or 4.43 percent.

EDITOR’S NOTE: If we do go into a deep recession, Trump is toast. It will be anyone but Trump, even the dogcatcher from Outhouse, Texas if he were running for president.