Stocks nosedive on Wall Street

Andrew Cummings
March 17, 2020

Markets have been highly volatile since COVID-19 began spreading throughout the world.

On a more global scale, the Fed in concert with five other central banks reduced the pricing on dollar swap lines to ensure that there is a sufficient amount of United States dollars - the global reserve currency - to ensure that the markets for borrowing and lending greenbacks overseas do not become overly strained.

NEW YORK, March 17 ― Wall Street suffered its biggest drop since 1987 yesterday, with the S&P 500 closing at its lowest level since December 2018, as investors fear the coronavirus pandemic is proving a tougher opponent than central banks, lawmakers or the White House are now capable of battling.

Investors also are not yet convinced that all the rushed, panicked responses are gaining traction. It took similar steps, known as quantitative easing, during the financial crisis.

"The fear factor is going through the roof this morning", said Peter Cardillo, chief market economist at Spartan Capital Securities in NY.

"The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses", the central bank said in a statement.

The U.S. Senate is under pressure to pass stimulus spending after the House of Representatives last week approved a multibillion-dollar bill.

The wheels of justice slowed too, as the U.S. Supreme Court put oral arguments on hold, including fights over subpoenas for President Donald Trump's financial records.

"Also, developments in Europe are raising the prospect that what was just a week ago considered "worst case" might be closer to "base case" for the U.S.", Ma said.

Finance ministers in the euro zone said the bloc so far has deployed a fiscal boost worth 1% of its gross domestic product to help the economy withstand the pandemic and pledged to do more if needed.

"Who needs Disneyland when the stock market is now the wildest ride on the planet", tweeted Media Matters researcher Nikki McCann Ramirez. Energy stocks tracked a 10% slump in oil prices, while technology stocks also shed 10%. Apple Inc, Inc and Microsoft Corp together lost almost $300 billion in market value.

Bitcoin was also bludgeoned, with Bloomberg data showing that it plunged as much as 18 percent on Monday before clawing back some of those losses.

That's more than 30% off its high just last month of 29,568.

The Dow Jones Industrial Average lost 2,997.10 points, or 12.9%, to 20,188.52, and the Nasdaq lost 970.28, or 12.3%, to 6,904.59. The S&P 500 dropped 12%, hitting its lowest level since December 2018, while the Nasdaq closed 12.3% lower in its worst day ever.

The yield on the 10-year Treasury slid to 0.73% from 0.95% late Friday, a sign that investors are flocking into investments seen as safe.

Stock values in the United States tumbled again on Monday despite a Federal Reserve decision to cut interest rates and allay investor fears over a coronavirus pandemic that has claimed nearly 7,000 lives globally.

The Nikkei 225 in Tokyo sank to 17,002.04 while Seoul's Kospi lost 3.2% to 1,714.86. Industrial output plunged 13.5% and retail sales 20.5%.

In Asia, Shanghai blue chips fell 4.3% overnight even as China's central bank surprised with a fresh round of liquidity injections to the financial system. Hong Kong's Hang Seng tumbled to 23,063.57. The euro gained to $1.1196 from $1.1105.

In currency markets, the dollar declined to 106.35 yen from Friday's 107.91.

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