U.S. stock markets sold off sharply at the open, with major indexes losing 7%, triggering a trading half for 15 minutes. When they reopened, both the Dow Jones Industrial Average and S&P 500 were down slightly more than 7%.
Trading will be halted again if losses reach 13% at any time before 3:25 p.m. Eastern time.
U.S. Treasury yields moved slightly higher with the 10-year at 70 basis points in midmorning trading.
The stock market drop followed swooning European markets and deepening worries about the spread of the novel coronavirus, which the World Health Organization on Wednesday declared a pandemic. The European Central Bank announced measures to support bank lending and expanded its asset purchase program by 120 billion euros ($135.28 billion) but did not announce an interest rate cut.
There was a slew of other news before the U.S. market open, reacting to the pandemic. The National Basketball Association suspended its season, Tom Hanks and his wife reported from Australia they have been infected with the coronavirus and, most importantly, President Donald Trump addressed the nation with his response to the scourge.
Trump announced a $5 billion expansion in Small Business Administration loans to small businesses in need of liquidity deferral of tax payments “for certain individuals and businesses negatively impacted” by the virus, a renewed call for Congress to approve an “immediate payroll tax cut” and a 30-day ban on travelers from Europe for the next 30 days, excluding travelers from the U.K. He later clarified that the ban doesn’t apply to goods or to American citizens.
The European Commission, the governing body of the European Union, sharply criticized the move. “The coronavirus is a global crisis, not limited to any continent and it requires cooperation rather than unilateral action,” it said. “The European Union disapproves of the fact that the U.S. decision to impose a travel ban was taken unilaterally and without consultation.”
Trump did not propose more immediate policies that could slow the spread of the virus such as guaranteed sick pay, which Democrats in Congress and Wall Street strategists have proposed.
Markets apparently were disappointed. “Equity markets are pessimistic today and volatility is elevated,” said UBS Global Wealth Management’s Chief Investment Officer Mark Haefele.
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