The stock market suffered its worst sell-off since the “Black Monday” crash of 1987 on Monday as a push by the Fed to stimulate the economy failed to placate coronavirus panic.
The Dow Jones Industrial Average had fallen by nearly 3,000 points by the time trading closed Monday afternoon, CNBC reported, a day after the Federal Reserve slashed interest rates to basically zero. The massive drop came as President Donald Trump hinted that a recession “may be” coming at a press conference on Monday, and as Americans braced for possibly many months of economic disruption caused by COVID-19.
Stocks suffer another bloody day
The DOW closed 2,999 points, or 12.9%, lower on Monday, the most brutal day for Wall Street in nearly three decades, according to CNBC. The S&P 500 meanwhile dropped 12%, and the Nasdaq closed 12.3% lower, its worst day in history. The Dow was down 31.7% from its all-time high, CNBC noted.
The drop came after another brutal sell-off in the morning, the day after an emergency interest rate cut to almost zero, that brought trading to a halt for about 15 minutes after a so-called “circuit breaker” was invoked to avoid a crash.
Despite the emergency actions taken, continuing anxiety over the coronavirus is leaving Wall Street in bear market territory. Consumer activity is sure to slow as Americans are encouraged (or possibly required) to stay in their homes, and businesses from small restaurants to airlines suffer a drop in activity.
“The Fed blasted its monetary bazooka for sure,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, told CNBC. “This better work because I don’t know what they have left and no amount of money raining from the sky will cure this virus. Only time and medicine will.”
An invisible enemy
With more than 3,700 cases and at least 60 deaths, COVID-19 is stirring panic all across America and causing unprecedented disruptions to people’s lives. Speculation of a recession has hit close to home for numberless Americans who are already feeling the economic impact of the deadly pandemic.
As more employees are sent home by their bosses and families ransack supermarket shelves, the government has been on a war footing to counter an economic downturn and contain the virus spread. President Trump acknowledged at a press conference on Monday that a recession “may be” possible in the near future as the stock market continued to drop, but predicted that the market would bounce back once the virus was contained.
“I don’t, number one, determine recession,” Trump said, according to The Hill. “I just say this: We have an invisible enemy. We have a problem that, a month ago, nobody ever thought about.”
Recession fears build
The president struck a martial tone with his talk of an “invisible enemy” and called on all Americans to change their lifestyle temporarily, ABC News noted. The Trump administration advised that all Americans avoid gatherings larger than 10 people and stay away from bars and restaurants, among other measures, as a number of states have moved to enact bans along similar lines.
“My administration is recommending that all Americans, including the young and healthy, work to engage in schooling from home when possible, avoid gathering in groups of more than ten people, avoid discretionary travel and avoid eating and drinking in bars, restaurants, and public food courts,” Trump said, according to ABC. He went on:
If everyone makes this change or these critical changes and sacrifices now, we will rally together as one nation and we will defeat the virus, and we are going to have a big celebration altogether. With several weeks of focused action, we can turn the corner and turn it quickly — a lot of progress has been made.
The U.S. government has already passed two coronavirus bills. Trump signed the first, an $8.3 billion package to fight the virus, and the House of Representatives passed a sweeping coronavirus stimulus package on Friday. Sen. Chuck Schumer (D-NY) proposed a $750 billion stimulus on Monday, The Hill reported.