Dow craters over 2,800 points after Fed takes emergency action to stem coronavirus fallout

U.S. equity markets plunged before easing some of the losses on Monday after the Federal Reserve took emergency action to combat the economic harm caused by the new coronavirus outbreak.

The Dow Jones Industrial Average recovered slightly after falling by more than 2,800 points, or 12 percent, at its worst levels while the S&P 500 and Nasdaq Composite were down 10.6 percent and 11.5 percent, respectively. Trading was halted for 15 minutes shortly after the opening bell due to the S&P 500’s decline of more than 7 percent.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 21108.12 -2,077.50 -8.96%
SP500 S&P 500 2481.94 -229.08 -8.45%
I:COMP NASDAQ COMPOSITE INDEX 7227.533974 -647.34 -8.22%

The sharp selloff comes after the Fed, at an emergency meeting on Sunday evening, cut its benchmark interest rate by 100 basis points to near zero and announced a $700 billion asset purchase program. The Fed’s action was part of a coordinated effort by central banks around the world.

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Federal Open Market Committee said in a statement. “The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.”

HOW LOW CORONAVIRUS-LED STOCK MARKET SELLOFF COULD GO: GOLDMAN SACHS

Looking at stocks, airlines remained at the center of the storm after United Airlines said its March revenue is expected to be $1.5 billion less than a year ago and that it would reduce flight capacity by 50 percent in April and May.

Ticker Security Last Change Change %
UAL UNITED AIRLINES HLDG. 35.09 -6.54 -15.72%
DAL DELTA AIR LINES INC. 35.53 -2.83 -7.37%
AAL AMERICAN AIRLINES GROUP INC. 13.92 -0.39 -2.73%

Casino operators were sharply lower after MGM Resorts and Wynn Resorts suspended operations at their Las Vegas casinos. However, cruise operators rallied after President Trump announced they would suspend departures for 30 days.

Ticker Security Last Change Change %
MGM MGM RESORTS INTERNATIONAL 11.99 -3.45 -22.34%
WYNN WYNN RESORTS LIMITED 59.47 -13.05 -18.00%
NCLH NORWEGIAN CRUISE LINE HOLDINGS LTD. 10.84 -0.26 -2.37%
RCL ROYAL CARIBBEAN CRUISES 31.93 -0.40 -1.24%

Apple shares tumbled after the tech giant announced the closure of all 468 of its retail stores outside of Greater China until March 27. On Friday, the company reopened all 52 of its Greater China stores.

Nike, Abercrombie & Fitch and Urban Outfitters also announced the closing of all of their retail stores while Starbucks said it would shut some locations.

Ticker Security Last Change Change %
AAPL APPLE INC. 253.22 -24.75 -8.90%
NKE NIKE INC. 69.93 -5.65 -7.48%
ANF ABERCROMBIE 9.35 -1.93 -17.11%
URBN URBAN OUTFITTERS INC. 13.81 -1.86 -11.89%
SBUX STARBUCKS CORPORATION 61.73 -8.19 -11.72%

Elsewhere, energy stocks plunged as West Texas Intermediate crude oil cratered to the $29 per barrel level.

Miners were also weaker as copper sank 4.5 percent to $2.3545 per pound, its lowest since the 2016 election, and gold slid 3.9 percent to $1,460 an ounce.

Ticker Security Last Change Change %
XOM EXXON MOBIL CORPORATION 35.23 -2.89 -7.58%
CVX CHEVRON CORP. 74.28 -9.14 -10.96%
CLR CONTINENTAL RESOURCES 8.79 -1.03 -10.54%
NEM NEWMONT GOLDCORP CORPORATION 40.23 +0.73 +1.85%
GOLD BARRICK GOLD CORP. 16.33 +0.66 +4.21%

Meanwhile, banks fell as heavy buying across the U.S. Treasury complex flattened the yield curve. The benchmark 10-year yield hovered around 0.81 percent while the 2-year yield was near 0.33 percent.

Ticker Security Last Change Change %
JPM JP MORGAN CHASE & CO. 89.60 -14.31 -13.77%
BAC BANK OF AMERICA CORP. 20.89 -3.27 -13.54%
WFC WELLS FARGO & COMPANY 27.96 -2.92 -9.47%

In Europe, France’s CAC led the decline, falling 5.6 percent, after the government shut restaurants and bars. Germany’s DAX dropped 4.9 percent and the FTSE slipped 4.6 percent.

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Overnight, markets slumped across Asia with Hong Kong’s Hang Seng shedding 4 percent, China’s Shanghai Composite sliding 3.4 percent and Japan’s Nikkei losing 2.5 percent.

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