BUSINESS

US stocks enter bear market and global stocks routed after President’s address

Mar 12, 2020, 7:03 AM | Updated: 9:23 am
futures...
Stock futures were up ahead of Trump address on coronavirus. Credit: JOHANNES EISELE/AFP via Getty Images

(CNN) — US stocks plummeted into bear market territory Thursday after President Donald Trump used a national address on the coronavirus to announce a ban on most travel from Europe, but failed to deliver the comprehensive economic and medical response to the outbreak that investors are craving.

The European Central Bank promised to ramp up its bond buying and add relief for regional lenders. The central bank disappointed investors hoping for further cuts to the already historically low interest rates.

European exchanges fell further into the red following the ECB’s actions. London’s FTSE 100 dropped 6.6%, Germany’s DAX declined 7.2% and France’s CAC 40 shed 7.5%. Italy’s benchmark stock index, which has dropped 18% this week, fell another 6%.

The S&P 500 opened down 6.5%, solidly in bear market territory. If it closes in a bear market, down 20% from its all-time high, it would end the longest bull-market run in American history. The Dow fell 1,600 points, or 6.9%. The Nasdaq futures dropped 6.8%.

Australia’s S&P/ASX 200, which entered a bear market on Wednesday, sank 7.4%. The Shanghai Composite Index ended the day down 1.5%. Hong Kong’s Hang Seng Index finished 3.7% lower, while South Korea’s Kospi Index closed down 3.9%. Both indexes are flirting with bear market territory.

Brent crude futures — the global oil benchmark — were down more than 6%, last trading at $33.54 per barrel.

The travel ban announced by Trump will run for 30 days, and is intended to insulate Americans from the coronavirus outbreak. The measure takes effect Friday at midnight and applies to countries in the Schengen Area, a zone without border controls that includes Italy, Germany, France, Spain and 22 other nations. The United Kingdom is not included.

Investors are struggling to see the endgame and “traders are hammering the sell button now thinking the US government has fallen well behind the curve in its [coronavirus] response,” said Stephen Innes, a market strategist at AxiCorp.

Initial confusion

Trump’s announcement — made during a televised address on Wednesday — initially sowed confusion. He described the suspension as affecting “Europe,” rather than the specific collection of countries that US authorities later clarified.

The president also said that the “prohibitions would not only apply to the tremendous amount of trade and cargo, but various other things as we get approval,” but later corrected himself on Twitter to say that “trade will in no way be affected” by the travel restriction.

“The restriction stops people not goods,” he said.

And US citizens and permanent residents who are in Europe will still be allowed back into the United States during the 30-day period, though will be screened upon entry and face quarantine or restrictions on their movement.

Even so, it remains unclear whether airlines will still fly the routes if passenger demand from European nationals dries up because of the ban.

“Travel restrictions equal slower global economic activity, so if you need any more coaxing to sell sell sell sell after a massively negative signal from overnight trading in US markets it just fell in your lap,” Innes wrote.

European airline stocks were hammered in early trading, with Air France KLM shares losing 4% and British Airways owner IAG dropping more than 8%. Shares of Delta are down 13% in premarket trading, while American Airlines’ stock is off 14%.

Disappointed markets

In his speech, Trump spelled out some other areas where he hopes to bolster a flagging economy, including deferring tax payments for some individuals and companies.

He said he would seek to provide “unprecedented” action that would allow sick workers to stay home and still be paid.

And he called on Congress to provide payroll tax relief to Americans, though that idea has been met with some resistance on Capitol Hill.

But Trump didn’t include many concrete measures to support the economy, wrote Jeffrey Halley, a market analyst with Oanda, in a research note. Investors were hoping for a much larger economic rescue package, and a comprehensive medical plan to address the threat posed by the coronavirus.

“That has probably disappointed markets more than anything,” Halley added.

The declines followed another volatile day on Wall Street in a roller coaster week for the markets driven by the novel coronavirus outbreak and plummeting oil prices. There are now more than 115,000 cases worldwide. More than 4,000 people have died.

Both the S&P 500 and the Dow slipped into bear market territory, but only the Dow closed the day in a bear market.

Two other key market indexes, the Dow Jones Transportation Average and the small-cap focused Russell 2000, are already in a bear market.

— Anneken Tappe contributed to this report.

The-CNN-Wire
™ & © 2020 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.

Today’s Top Stories

Business

In this undated photo released by Toyota Motor Corp., its bZ4X vehicle is shown during an online pr...
YURI KAGEYAMA AP Business Writer

Toyota recalls electric car for faulty wheel that may detach

The "bz" in the recalled model's name, as well as others in the works, stands for a "beyond zero" series, including sport-utility vehicles of all sizes, pickup trucks and sportscars, according to Toyota.
5 days ago
A model wears a creation as part of the Giorgio Armani men's Spring Summer 2023 collection presente...
COLLEEN BARRY

Gucci unveils ‘HaHaHa’ collaboration with Harry Styles

Gucci has teamed up with Harry Styles for a between-season collection that infuses tailoring with adolescent joy. The collection is titled “HaHaHa.”
9 days ago
A now hiring sign in an Arby's window.; the Utah employment summary for May showed a slight slowing...
Amie Schaeffer

May’s Utah employment report showing signs of inflation impact

The employment rate in Utah remains steady but may be showing signs of inflation's impact, according to the state's May employment summary.
12 days ago
Attic fire in Cowabunga Bay building....
Mark Jones

Cowabunga Bay Water Park set to reopen Thursday after fire last weekend

Following a building fire last weekend, Draper's Cowabunga Bay Water Park is scheduled to reopen to the public on Thursday.
14 days ago
Utah airbnb rentals rising interest rates affecting millennial home buyers...
Dan Bammes

One realtor sees “signs of hope” in Utah housing market

With home listings up and home sales down, one Utah realtor is encouraged about the future of the Utah housing market, leading to what she calls "signs of hope."
15 days ago
Some executives are keeping their employees home in a way to save money and possibly help lower the...
Heather Kelly

Working from home could help bring down gas prices

Some businesses are having employees return to working remotely as a way to have money on gas, and possibly help lower gas prices.
19 days ago

Sponsored Articles

Tax Harassment...
Jordan Wilcox

The best strategies for dealing with IRS tax harassment | You have options!

Learn how to deal with IRS tax harassment. This guide will teach you how to stop IRS phone calls and letters, and how to handle an IRS audit.
spend a day at Bear Lake...
Bear Lake Convention and Visitors Bureau

You’ll love spending the day at Bear Lake | How to spend a day at Bear Lake

Bear Lake is a place that needs to be experienced. Spend a day at Bear Lake.
Curb Appeal...
Price's Guaranteed Doors

How to have the best of both worlds for your house | Home security and curb appeal

Protect your home and improve its curb appeal with the latest security solutions like beautiful garage doors and increased security systems.
Prescription opioids can be disposed of during National Prescription Take Back Day...
Know Your Script

Prescription opioid misuse | How to protect your family from the opioid epidemic

Studies have shown that prescription opioid misuse has increased since COVID-19. So what do you need to know about these opioids?
Follow @ikeyospe...

Tax Tuesday: The Most Common Mistakes People Make When Filing Their Taxes

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
Follow @ikeyospe...

Tax Tuesday: How will last year’s child tax credits affect you?

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
US stocks enter bear market and global stocks routed after President’s address