Dow Plunges 2,300 Points: Stocks In Meltdown As Panic Selling Continues

Mar 12, 2020
Originally published on March 12, 2020 3:41 pm

Updated at 4:04 p.m. ET

The stock market has suffered a relentless, breathtaking drop — moving deeper into bear territory. Stocks fell so fast Thursday morning that it triggered a 15-minute halt in trading for the second time this week.

The Dow Jones Industrial Average fell 2,352 points, or nearly 10% — the biggest one-day drop since 1987. The S&P 500 and the Nasdaq were each down more than 9%.

Those indexes are now down at least 27% from record highs set just last month. The Dow is now down nearly 8,400 points from its peak on Feb. 12.

Thursday's stock market drop followed a nearly 6% plunge in the Dow on Wednesday, when the blue chip index entered a bear market, defined as falling 20% from its peak. The S&P 500 is now also in a bear market, ending an 11-year winning streak.

The market tumble came after President Trump announced a 30-day travel ban on visitors from European countries (not including the United Kingdom) to the United States.

Trump said it was an effort to stem the spread of the coronavirus, but the move caused confusion on both sides of the Atlantic and drew skepticism from several health experts. And it was also another blow to airlines, hotels and tourist attractions that have already taken a beating.

In remarks to reporters, Trump tried to calm markets, predicting stocks would eventually bounce back.

The Federal Reserve moved aggressively to try to calm investors rattled by the global coronavirus pandemic, but then the market slide continued. The New York Fed said it would pump $1.5 trillion into short-term funding markets over the next two days.

"These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak," the New York Fed said.

Last week, the Fed cut interest rates by half a percentage point in an emergency move. Some analysts expect the central bank to cut rates again at its March 18 meeting, if not sooner. Those rates affect the cost of borrowing on everything from credit cards to auto loans.

In addition to the travel ban, Trump also announced measures to overcome "temporary economic disruptions" caused by the COVID-19 disease. The proposals include a $50 billion program to provide low-interest loans to small businesses affected by the coronavirus.

Congressional Democrats also unveiled a legislative stimulus package aimed at easing the economic damage. Their plan includes expanded unemployment reimbursement for states, extra money for food security for low-income children and federally funded family and sick leave for people affected by the virus.

The coronavirus pandemic has had far-reaching and quickly developing economic impacts.

Thursday morning, Princess Cruises, which has had several ships hit by coronavirus outbreaks, announced that it will pause operations of its 18 cruise ships globally for 60 days. The move is in response "to the unpredictable circumstances evolving from the global spread of COVID-19," the company said.

The airline industry has also been hard hit by travel cancellations and travel restrictions. "I would say we're in the middle of a very significant impact, some would say devastating impact, to the airline industry," JetBlue CEO Robin Hayes told NPR.

The NBA suspended the rest of its season after a player on the Utah Jazz preliminarily tested positive for the coronavirus. Major League Baseball canceled the remainder of spring training and said it would delay the start of the regular season by at least two weeks. The National Hockey League also announced a "pause" in its season. And the NCAA canceled its Division I men's and women's college basketball tournaments, known as March Madness.

In New York, Broadway theaters were shut down after Gov. Andrew Cuomo announced restrictions on gatherings of more than 500 people.

The European Central Bank announced a series of stimulus measures to help banks and other businesses. But unlike the Federal Reserve and the Bank of England, the ECB failed to cut interest rates.

"The spread of the coronavirus has been a major shock to the growth prospects of the global economy and the euro area economy, and it has heightened market volatility," ECB President Christine Lagarde told a news conference, according to Reuters.

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We are watching stocks continue to melt down this morning. This is all amid rising concerns about the coronavirus. In fact, the drop was so big today that trading was called to a halt briefly. The S&P 500 index plunged by 7%. The Dow Jones Industrial Average also fell deeper into bear market territory. Investors are worried about the spread of COVID-19 and the economic cost of trying to contain the pandemic.

We've got NPR's chief economics correspondent Scott Horsley with us to help us sort through the consequences of all this. Scott, the market opened a little under an hour ago. What have we seen?

SCOTT HORSLEY, BYLINE: Well, stocks plunged right at the opening bell. The S&P 500 hit that 7% down threshold almost immediately. And just as happened on Monday, that triggered a 15-minute halt to trading. That's designed to sort of give traders and investors a little chance to catch their breath, think about what they're doing. Trading has since restarted. The S&P, as of this moment, is down a little more than 7%. The Dow Jones Industrial Average is off about 8.5%. Of course, just yesterday, the Dow crossed into bear market territory, ending a bull run that had lasted for 11 years.

MARTIN: So let's talk about what President Trump has been saying. Last night, he gave his address from the Oval Office. Let's listen to a clip, and we'll talk on the other side.


PRESIDENT DONALD TRUMP: I will soon be taking emergency action, which is unprecedented, to provide financial relief. This will be targeted for workers who are ill, quarantined or caring for others due to coronavirus.

MARTIN: And I want to get to the financial relief that the president is proposing. But first, we need to note a few different things because the president made several errors in that announcement. He said all travel from Europe was being cut off. That's not accurate - American citizens, permanent residents, other groups are exempted. And it doesn't apply to all European countries. The vice president, Mike Pence, was on CNN this morning claiming that the president's remarks were not confusing. But we saw the acting head of the Department of Homeland Security, Ken Cuccinelli, have to come out and tweet a correction about that limited ban - so the White House having to do some backtracking.

As far as that financial help, what did the president call for?

HORSLEY: Well, it was fairly short on specifics, and that's maybe one reason the market is behaving the way it is. They perhaps wanted to see something a little bit stronger and a little bit more refined from the administration. What the president is calling for is some kind of emergency action to help workers who don't have sick leave and who are forced to stay home, either because they get sick or because their business is quarantined or because they're caring for someone else who might be ill.

Now, the president didn't say how this would work, but the idea is to make up for people's lost pay so they don't feel pressure to go to work sick and possibly spread the virus. The president also said he would be asking Congress for some kind of help to extend this aid. Now, the administration's also talking about having the Small Business Administration offer low-cost loans to businesses that are affected by the coronavirus outbreak, just as they would do in a different sort of natural disaster. And once again, the White House is asking Congress to provide more funding so those small business loans can be bigger. The request was for $50 billion in funding.

The president also suggested that the April 15 tax deadline might be pushed back to buy some more time for people who've been affected by the outbreak and also keep a lot of extra money just floating around the economy to sort of grease the wheels of commerce a little bit. And then he repeated his call for a payroll tax cut. That's kind of been the signature way that the president has talked about propping up the economy against this outbreak, but there's very little appetite for that in Congress.

MARTIN: Scott, I forgot to mention one other error the president made. He said, initially in his address, that goods would be affected - that this was going to affect trade. And then he had to tweet out a correction hurriedly to assure the markets that this - that the limited travel ban with Europe was not going to affect trade. I mean, clearly the administration is trying to shore up the economy, trying to reassure the markets. It's not working.

HORSLEY: Right. And this just sort of illustrates a little bit the haste and not quite ready for primetime nature of this response so far. Europeans say they got no warning about this travel ban for countries that are being affected - continental Europe - and so that's obviously been jarring. And there's also some question of the value of this sort of fortress America approach to what is now a global pandemic. Already, we had more than 600 new cases of coronavirus reported in the U.S. yesterday, so it may be that the value of trying to put up these travel bans is limited.

But you're right. The president added to the confusion. I think he perhaps just strayed a little bit from the teleprompter or misread the scripted remarks. And so there was some confusion about whether cargo trade would be affected, and it's not going to be.

MARTIN: NPR chief economics correspondent Scott Horsley.

Thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.