Wall Street tumbles 12% as coronavirus fears overwhelm emergency measures
New York — Wall Street suffered its biggest drop since 1987 on Monday, with the S&P 500 closing at its lowest level since December 2018, as investors fear the coronavirus pandemic is proving a tougher opponent than central banks, legislators or the White House are capable of battling.
The S&P 500 tumbled 12%, its biggest drop since "Black Monday" three decades ago, despite the Federal Reserve's surprise move late Sunday to cut interest rates to near zero, its second emergency interest rate cut in less than two weeks and ahead of its scheduled policy meeting on Tuesday and Wednesday.
Nasdaq Composite dropped 970.28 points, or 12.32%, to 6,904.59, it's worst day on record, and the Dow slumped almost 13% on the day.
That added to alarm about the rapid spread of the pandemic and how it has paralysed parts of the global economy and squeezed company revenue.
Stocks fell further late in the session as President Donald Trump warned of possible recession and urged Americans to halt most social activities for 15 days and not congregate in groups larger than 10 people, in a newly aggressive effort to reduce the spread of the coronavirus in the US.
"It's a market adrift with nothing to hold on to. There's nothing that can really give us a sense of when the full extent of the virus’s impact will be known," said Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
Most market watchers at this point are bracing for the likelihood that the economy is headed for a recession, but they said it is too early to know the full extent of the economic downturn. Investors may be expecting a fairly deep recession but are just not sure how long it's going to last, Kleintop said.
The Dow Jones Industrial Average fell 2,997.1 points, or 12.93%, to 20,188.52, the S&P 500 lost 324.89 points, or 11.98%, to 2,386.13 and the Nasdaq Composite dropped 970.28 points, or 12.32%, to 6,904.59.
Trading on Wall Street's three main stock indexes was halted for 15 minutes shortly after the open as the S&P 500 index plunged 8%, crossing the 7% threshold that triggers an automatic cutout.
The real estate sector was the weakest out of the S&P 500's 11 major sectors with a 16.5% dive, which was its deepest one-day percentage drop since 2009. The smallest loser was consumer staples which sank 7% on the day.
The technology sector fell 13.9%, which was a record one-day decline for the sector that was the biggest driver of the bull market.
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