Dow Falls 10 Percent in Brutal Day
Wall Street posted historic losses on 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 10 percent, while the Nasdaq and S&P 500 fell 9 percent. It was the worst point drop for the Dow and its worst performance since the market crash in 1987.
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Banks and the travel and energy sectors posted double-digit losses after President Donald Trump banned foreign entry to the United States for some travelers.
Trading stopped twice, resulting in thresholds that stopped market activity on the floor of the New York Stock Exchange in pre-market trading and immediately after the opening bell. Even an emergency injection of Federal 500 billion from the Federal Reserve did little to calm the markets.
“Everything is going to recover and it is going to recover very big,” Trump said Thursday, during a meeting with the Prime Minister of Ireland, Leo Varadkar.
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Investors had been anticipating solid economic relief as part of Trump’s speech to the nation Wednesday night, in line with his promise this week to take “important steps” and implement a “very substantial” tax cut as part of the administration’s response to the pandemic.
However, markets were disappointed 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 in the United States.
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In his Oval Office speech, Trump announced that he would “suspend all travel from Europe to the United States for the next 30 days” to limit the spread of the coronavirus. That created immediate panic when Americans abroad rushed to buy last-minute tickets home and fueled the trader’s concern that suspended travel and trade between the United States and the European Union would come at a high 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 citizens who have been in certain European countries at any time during the 14 days prior to their scheduled arrival in the United States.”