Wall Street tumbles, Dow confirms bear market

Reuters NEW YORK | Updated on March 12, 2020

Rate-sensitive US banks tumble.   -  Reuters

White House orders coronavirus meetings classified

Wall Street stocks plunged on Wednesday, with the Dow confirming a bear market for the first time since the financial crisis after the World Health Organization called the coronavirus outbreak a pandemic.

All three major US stock averages ended the session sharply lower, with the benchmark S&P 500 and Nasdaq composite index both about 19 per cent below their February 19 record closing highs. A bear market is confirmed when an index closes 20 per cent or more below its most recent closing high.

Market participants were further rattled following a Reuters report that the White House had ordered top-level coronavirus meetings to be classified.

“There's just a plethora of bad news today, a growing number of people with the disease, there are different points of view in how stimulus should work, and the market is acting accordingly,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “You call this thing a pandemic and all hell breaks loose.”

A lack of details from the Trump administration regarding its plans for fiscal stimulus, and partisan wrangling in Washington, added further unknowns to the mix. “Fiscal help may be slow in coming, because of differences between the president and Congress on what form it should take,” added Tuz.

Boeing Co was the biggest drag on the blue-chip Dow, sinking 18.2 per cent after announcing plans for a full drawdown of an existing $13.8 billion loan as early as Friday. The planemaker suffered its biggest ever three-day fall, surpassing the aftermath of the Sept. 11, 2001 attacks.


Stocks worldwide lost ground despite global stimulus efforts to soften the economic blow of the virus, named COVID-19, with Britain and Italy announcing war chests to contend with the growing crisis. Concerns over the fast-spreading virus have ravaged markets and hobbled supply chains as countries around the world grapple with how to contain both the virus and its economic impact.

As part of those efforts, the US Federal Reserve is widely expected to cut interest rates for a second time this month at the conclusion of a two-day monetary policy meeting next week.

The Dow Jones Industrial Average fell 1,464.94 points, or 5.86 per cent, to 23,553.22, the S&P 500 lost 140.85 points, or 4.89 per cent, to 2,741.38 and the Nasdaq Composite dropped 392.20 points, or 4.7 per cent, to 7,952.05. All 11 major sectors in the S&P 500 ended the session sharply lower.

Rate-sensitive banking stocks were down 5.9 per cent as US Treasury yields dropped. Nike Inc fell 4.9 per cent on fears of virus-related sales slump in China. Declining issues outnumbered advancing ones on the NYSE by a 13.61-to-1 ratio. On Nasdaq, a 8.24-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs, and 131 new lows; the Nasdaq Composite recorded six new highs and 816 new lows. Volume on US exchanges was 15.10 billion shares, compared with the 11.92 billion average over the last 20 trading days.

Published on March 12, 2020

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