Stocks cratered today as the escalating coronavirus pandemic and lingering questions about President Trump’s response drove the worst day of losses for Wall Street since the 1987 crash.
The Dow Jones Industrial Average closed with a loss of 2,352 points, dropping 10 percent for its steepest loss by percentage since falling 22.6 percent on Oct. 19, 1987.
The Dow’s Thursday losses also exceeded its 7.87-percent plunge on Oct. 15, 2008, which was the index’s most recent record for the steepest single-day drop by percentage.
The reviews on Wall Street to Trump’s prime-time Oval Office address on the response to the coronavirus were not kind.
From Trump’s misstatements of White House policy to his lack of clarity on the funding he wanted, analysts said the speech ended up being more harm than help in his apparent desire to calm financial markets.
The speech last night included him saying that cargo from Europe would be blocked, which the White House clarified was not accurate and that the ban was limited to passengers.
Here’s a look at what some are saying, as markets kicked off another rough day, with U.S. stocks SPX, -9.51% SPX, -9.51% falling sharply enough at the opening bell to trigger the week’s second trading halt.
• “President Trump in an extraordinary Oval Office address didn’t offer up major new ideas on stimulus and only said he’d propose a vague payroll tax holiday to Congress without strongly standing up for any firm size/magnitude. This effectively kicks the issue to Congress which is still planning to go on recess next week.” — Ernie Tedeschi, Evercore ISI
• “President Trump’s address to the nation was symptomatic of the lack of policy coordination in the face of a global coronavirus pandemic. Amidst rapidly rising domestic COVID-19 infections, the president blamed Europe for mismanaging the crisis, and imposed a 30-day ban of foreigners travelling from the region.” — Gregory Daco, Oxford Economics
• “In our view, the failure to include announcements of stronger domestic public health responses — from expanded testing to mobilization of emergency medical capabilities — will hinder Administration efforts to build public trust in the US effort. The counter to Trump’s response is already beginning to form, as House Speaker Nancy Pelosi (D-CA) introduced her opening bid for what a stimulus package will look like.” — Clayton Allen, Height Securities
• “Markets are upset because 1) there are few policies to limit the near-term economic damage; 2) President Trump got several policies wrong, raising questions about policy coherence; and 3) characterizing this as a foreign virus suggests an unrealistic assessment of the risks.” — Paul Donovan, UBS
• “We are confident that a macroeconomically significant ($100bln+) fiscal policy package will eventually pass Congress, but likely not before the one-week recess beginning Friday. Markets will likely remain sensitive to headlines regarding negotiations between Congress and the administration.” — Andrew Hollenhorst, Citi
Traders on Thursday complained that monetary policy alone cannot save the country from a pandemic that’s hurting a slew of industries from the airlines to Broadway as people cancel their travel plans and large gathering become taboo.
“We wanted a bazooka,” said one hedge fund manager that trades US Treasuries. “What we got was a handgun with rubber bullets. But in fairness to the Fed, what we really need are test kits for this virus.”
The carnage is likely to continue until the US government puts forward a concrete fiscal stimulus package to blunt the economic damage of the coronavirus pandemic — something that was noticeably absent from Trump’s speech on the crisis, according to Quincy Krosby, chief market strategist at Prudential Financial.
Thursday’s selloff was “the market screaming … that you’re going to see a deterioration in the economic landscape, and we need these proposals intact and delivered as an emergency measure to cushion the economy,” Krosby said.