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The Dow Jones Industrial Average tumbled into a bear market Wednesday, down 20 percent from its February peak, after the World Health Organization declared the new coronavirus outbreak a pandemic and Congress wrangled over an economic stimulus plan.
The Dow fell more than 1,600 points, or 6.4 percent, while the S&P 500 and Nasdaq Composite were down over 5.5 percent. An official bear market would begin if the Dow finished below 23,641.14. The S&P 500 and Nasdaq composite would be in their own bear markets with respective closes below 2,708.92 and 7,853.74.
“Logic would probably dictate just to get out of the way and let the tanks roll down the field, and stay in your fox hole and not stick your head up because there is no question that cash is king,” Ted Weisberg, president of Seaport Securities, told FOX Business’ Liz Claman from the floor of the New York Stock Exchange. “But if you’re long stocks and own good stocks, you just kind of have to hunker down and wait for the dust to settle.”
Stocks, which traded lower all session long, saw selling pick up after Tedros Adhanom Ghebreyesus, director-general of the WHO, called COVID-19 a “pandemic,” noting there are more than 118,000 cases worldwide which have resulted in 4,291 deaths. Ahead of the announcement, the major averages were under significant pressure after reports said House Majority Leader Steny Hoyer, D-Md., balked at some of the economic stimulus initiatives being floated by President Trump.
Wednesday’s selling comes after the major averages all gained close to 5 percent Tuesday as Trump floated a payroll tax cut and other fiscal measures to buoy the U.S. economy.
In corporate news, Boeing led the Dow’s dip on reports it is preparing to draw on its $13 billion line of credit established to give the planemaker financial flexibility as it deals with the fallout from the Max Jet crisis.
Sal Suarino, center, works with fellow traders on the floor of the New York Stock Exchange, Tuesday. (AP Photo/Richard Drew)
Airlines were in focus after American, Delta and United on Tuesday cut more domestic and international flights amid a wave of cancellations. Cruise operators and online travel-booking companies were also trending down.
Elsewhere, Nike shares fell after rivals Adidas and Puma warned their sales in China took a hit due to COVID-19.
Meanwhile, some pharmaceutical companies looking for COVID-19 treatments were rocketing higher.
Volatility continued in the oil market, with West Texas Intermediate crude oil sinking 4 percent to $32.98 a barrel. The plunge in oil prices weighed on majors Exxon Mobil and Chevron, as well as Continental Resources and Chesapeake Energy, which announced it was seeking shareholder support for a reverse stock split.
Banks were also under pressure as the one-two punch of weaker economic activity due to COVID-19 and plunging oil prices remains a drag.
U.S. Treasurys fell, causing the yield on the 10-year note to climb by 5.6 basis points to 0.808 percent. The yield was down more than 5 basis points earlier in the session.
European markets fell despite the Bank of England announcing an emergency rate cut of 50 basis points, lowering its key interest rate to 0.25 percent. Britain’s FTSE finished down 1.4 percent while Germany’s DAX and France’s CAC lost 0.4 percent and 0.6 percent, respectively.
Asian markets were lower across the board with Japan’s Nikkei falling 2.3 percent, China’s Shanghai Composite shedding 0.9 percent and Hong Kong’s Hang Seng sliding 0.6 percent.