Wall Street recorded historic losses Thursday as fears intensified over the economic fallout from the coronavirus pandemic amid what some saw as an anemic response from the White House.
The Dow Jones Industrial Average fell by 10 percent, with the Nasdaq and the S&P 500 both down by 9 percent. It was the worst point drop ever for the Dow and its worst performance since the market crash in 1987.
Banks and the travel and energy sectors all notched up double-digit losses after President Donald Trump issued a ban on foreign entry into the U.S. for some travelers.
Trading was halted twice, triggering thresholds that paused market activity on the floor of the New York Stock Exchange in premarket trading and immediately after the opening bell. Even an emergency injection of $500 billion from the Federal Reserve did little to calm the markets.
“It’s going to all bounce back and it’s going to bounce back very big,” Trump said Thursday, during a meeting with Ireland’s prime minister, Leo Varadkar.
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Investors had been anticipating robust economic relief as part of Trump’s address to the nation Wednesday night, in line with his pledge this week to take “major steps” and implement a “very substantial” tax cut as part of the administration’s response to the pandemic.
However, markets were underwhelmed by the economic stimulus package, which offers emergency loans to small businesses and deferred tax payments for some people but made no specific mention of paid sick leave or free testing for the coronavirus, which continues its spread across the U.S.
In his address from the Oval Office, Trump announced that he would be “suspending all travel from Europe to the U.S. for the next 30 days” to limit the spread of the coronavirus. That created immediate panic as Americans abroad rushed to buy last-minute tickets home and fueled trader concern that suspended travel and trade between the U.S. and the European Union would come at a steep economic cost.
The White House later clarified that Trump’s comments did not refer to U.S. citizens or permanent residents and only “suspends the entry of most foreign nationals who have been in certain European countries at any point during the 14 days prior to their scheduled arrival to the United States.”
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Trading was also suspended earlier this week, when the S&P 500 hit the 7 percent “circuit breaker” threshold Monday morning. That sell-off came after an oil production spat between Russia and Saudi Arabia pushed the price of oil down by 30 percent overnight, the biggest drop since the Persian Gulf War in 1991.