Business & Economy

Dow Jones plunges 10 pct. in worst drop since 1987 crash

New York, Mar 12 (efe-epa).- Wall Street accelerated its decline in the last minutes of the trading session on Thursday with the Dow Jones tanking almost 10 percent, its worst percent drop since the 1987 “crash,” after the US ban on flights arriving from Europe in an attempt to contain the spread of the coronavirus and despite the drastic injection of liquidity announced by the Federal Reserve to prop up the economy.

At the close of trading on the New York Stock Exchange, the Dow Jones Industrial Average was down 9.99 percent, or 2,352.60 points, ending the day at 21,200.62, clearly in “bear market” territory and down in excess of 20 percent from its recent highs.

The S&P500 index, which forced a halt in trading for 15 minutes just after the opening bell when the index fell 7 percent and the so-called “circuit breakers” kicked in to give traders a breather and potentially stem a precipitous market drop – for the second time this week – ended the day down 9.51 percent, or 260.74 points, at 2,480.64.

The NASDAQ Composite Index, which includes the most important tech companies, dropped 9.43 percent, or 750.25 points, to 7,201.80.

The three main market indicators are all in bear market territory, with the Dow passing through that minus-20 percent threshold on Wednesday and the other two following suit on Thursday, all of them experiencing panic selling that has broken the long-term bull market, which has been under way since 2009.

President Donald Trump on Wednesday evening gave a nationwide televised address in which he said that the US would suspend all flights from Europe – except for those from the United Kingdom – starting on Friday at midnight, a move designed to contain the coronavirus, which has infected, officially at least, some 125,000 people worldwide, but a measure that has hit the tourism and airlines sectors especially hard.

Among the largest airlines, United was down sharply on Thursday by 24.85 percent, Southwest lost 15.1 percent, Delta 21 percent, JetBlue 15.33 percent and American Airlines 17.28 percent, while cruise ship company Princess Cruises – which belongs to Carnival, the second largest cruise company in the world in terms of its earnings – announced that it was suspending operations for 60 days and shares of which plummeted 31 percent in price.

At midday, hopes among traders and investors were momentarily raised and the losses experienced so far during the session were partially erased – by about 6 percent – when the Fed announced that it will inject $1.5 trillion into the financial system, a drastic measure aimed at trying to alleviate the financial “disruptions” caused by the coronavirus pandemic. Shortly thereafter, however, investors decided that the move was insufficient and prices began plunging again.

The New York Stock Exchange joined European markets in suffering huge point losses despite the measures taken by the European Central Bank to try and brake the economic impact of the spread of Covid-19, to which humans have no immunity and which has been fatal to about 2 percent of those known to have contracted it, according to official figures.

By sectors, the greatest losses were suffered by energy companies (down 12.3 percent), financials (-10.77 percent), industrials (-10.33 percent) and public services (-10.2 percent).

Among the 30 stocks quoted in the Dow, all of which were in the red on the day, the most notable losers were Boeing (-18.1 percent), Dow Inc. (-14.5 percent), Disney (-12.98 percent) and IBM (-12.85 percent).

In other markets, West Texas Intermediate Crude Oil lost 4 percent, ending the trading session at $31.50 per barrel, the yield on the 10-year US Treasury Bond rose to 0.849 percent, gold slid to $1,568 per ounce and the dollar gained ground against the euro, with the European currency closing at $1.1163.

Related Articles

Back to top button