The Dow Jones Industrial Average has officially entered a bear market, dropping 20 percent from its recent peak as the World Health Organization declaring coronavirus a global pandemic.
The Dow closed down 1,464 points, or 5.86 percent, at 23,553.32 on Wednesday, a more than 20 percent decline from the all-time high reached on February 12.
The S&P 500 and Nasdaq were both down nearly 5 percent on Wednesday, close to but not quite entering bear territory. Bear and bull markets are defined as 20 percent movements off recent peaks and troughs, respectively.
It marked the end of the longest bull market in U.S. history, which stretched back 11 years to the end of the Great Recession.
It follows a day on which Wall Street jumped nearly 5 percent, driven by expectations that President Donald Trump would discuss a payroll tax cut and announce other ‘major’ stimulus measures at a news conference.
But investors grew frustrated with the lack of details after Trump failed to outline any concrete steps to bolster domestic economic growth following a meeting with Senate Republicans.
On Tuesday, stocks soared in late trading following a report that Trump had pitched a 0 percent payroll tax in his meeting with Republican lawmakers.
Cutting payroll taxes is a way to immediately inject money into the economy, although legislators would have to find ways make up payroll tax funding that goes to Social Security, Medicare, and unemployment compensation funds.
But instead of offering details on a stimulus plan at a press briefing after the meeting on Capitol Hill, Trump advised Americans to just ‘stay calm’ and said that the coronavirus will ‘go away’.
Any plan the White House introduces will need to be approved by both houses of the U.S. Congress.
Stocks also shrugged off a surprise move by the Bank of England to cut interest rates and support bank lending, which had lifted sentiment in Europe and Asia overnight.
The three main indexes came within a hair’s breadth of confirming bear market territory, implying a drop of 20 percent from record highs, on Monday following a collapse in oil prices.
The S&P 500 is now about 15 percent below its all-time high hit just three weeks earlier.
Analysts now expect the U.S. Federal Reserve to cut rates for the second time this month when it meets next week, pressuring Treasury yields further.
Rate-sensitive U.S. lenders tumbled, with Citigroup Inc, JPMorgan Chase & Co and Morgan Stanley down between 2.2 percent and 3.7 percent in premarket trade.
Stocks also shrugged off Joe Biden rolling into commanding victories in pivotal Michigan and two other states on Tuesday, taking a big step toward the Democratic Party’s presidential nomination.