Stocks plunge deep into bear-market territory amid European travel ban

U.S. equity markets cratered Thursday after President Trump suspended travel from Europe for 30 days in an effort to contain the spread of the coronavirus pandemic.

At midday, the Dow Jones Industrial Average had tumbled 1,950 points, or 8.4 percent, narrowing earlier, intermittent losses of more than 2,000 points. The S&P 500 was down 7.3 percent, while the Nasdaq dropped 6.7 percent.

U.S. equity markets were halted shortly after the opening bell when the S&P fell by 7 percent. Trading, which resumed after a 15-minute stoppage, will be halted a second time if the S&P 500 loses 13 percent

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 21378.97 -2,174.25 -9.23%
SP500 S&P 500 2526.39 -214.99 -7.84%
I:COMP NASDAQ COMPOSITE INDEX 7340.183326 -611.87 -7.69%

The early selling, which pushed all three of the major averages deep into bear-market territory, is on track to end the S&P 500 and Nasdaq Composite’s historic bull markets that began on March 9, 2009. The Dow’s bull-run ended on Wednesday. A bear market is defined by a 20 percent drop from the recent peak.

“We made a lifesaving move with early action on China,” Trump said as he explained the European ban, which excludes the U.K., in an Oval Office address on Wednesday evening. “Now we must take the same action with Europe.”

COVID-19 has infected 14,858 people and killed 702 in Italy, France, Spain and Germany, according to the latest update from the World Health Organization.

Looking at stocks, American Airlines, Delta Air Lines and United Airlines plunged amid worries that the European travel ban would further damage earnings already hindered by slowing demand due to the virus.

Ticker Security Last Change Change %
AAL AMERICAN AIRLINES GROUP INC. 14.81 -1.45 -8.92%
DAL DELTA AIR LINES INC. 36.61 -6.06 -14.20%
UAL UNITED AIRLINES HLDG. 41.39 -7.95 -16.11%

Still, “our sense is that there have already been so many transatlantic cancellations, that it may not make much of a difference,” Deutsche Bank analyst Michael Linenberg wrote in a note to clients on Thursday.

Other travel-related names, including cruise operators Carnival Corp. and Norwegian Cruise Line Holdings tanked, as did online travel-booking sites Booking Holdings and Expedia.

Ticker Security Last Change Change %
CCL CARNIVAL CORP. 17.64 -4.11 -18.87%
NCLH NORWEGIAN CRUISE LINE HOLDINGS LTD. 10.83 -4.20 -27.94%

West Texas Intermediate crude plunged 5.8 percent to $31.45 a barrel, dragging oil majors ExxonMobil and Chevron lower. Meanwhile, battered U.S. shale companies such as Continental Resources and Pioneer Natural Resources remained under pressure.

Occidental Petroleum was weaker after activist investor Carl Icahn told The Wall Street Journal that he raised his stake in the company to almost 10 percent from 2.5 percent.

Stocks gaining ground were few and far between. Medical-mask maker Alpha Pro Technology soared after reporting heavy demand for its products, and Inovio Pharmaceuticals spiked after receiving a $5 million grant from the Gates Foundation for testing a device that may be used to deliver a COVID-19 vaccine.

On the earnings front, Dollar General reported better than expected top and bottom-line results, and said that while it has not experienced supply-chain disruptions due to the COVID-19, there’s “no guarantee” its business would be insulated from the outbreak.

U.S. Treasurys surged, pushing the yield on the 10-year note down 18.4 basis points to 0.688 percent. Earlier this week, the benchmark yield touched a record low of 0.38 percent.

European markets were hammered, with Britain’s FTSE plunging 7 percent and both Germany’s DAX and France’s CAC 40 down by more than 6 percent.

Overnight, markets ended sharply lower across Asia. Japan’s Nikkei tumbled 4.4 percent while Hong Kong’s Hang Seng and China’s Shanghai Composite shed 3.7 percent and 1.5 percent, respectively.

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