The stock market tanked on Monday 16th March, falling more than 12% after President Trump said that the coronavirus could last longer than expected, and that the U.S. could face a recession despite the Fed’s massive interest rate cut over the weekend.
At a press conference with members of the coronavirus task force on 16th March, President Trump said the worst of the coronavirus outbreak could last until August. He also told reporters that the U.S. “may be” heading for a recession; experts agree.
Stocks fell sharply after Trump’s comments, with the Dow Jones Industrial Average down almost 13%, nearly 3,000 points, the S&P 500 down 12%, and the Nasdaq Composite down by 12.3%.
Monday’s drop was one of the largest on record in terms of points lost—for the Dow, it was worse than the ‘Black Thursday’ sell-off of 10% last week, and second only to the 1987 ‘Black Monday’ market crash. It was also the Nasdaq’s biggest one-day loss in history.
Earlier in the day, steep losses triggered a halt in trading for the fourth time in the last two weeks, as overnight stock futures for all three major indexes hit their limit-down levels of 5% or lower in pre-market trading.
On Monday, the Federal Reserve announced a sweeping stimulus program to prop up the economy: it slashed rates to near-zero levels, pledged to increase its bond holdings by USD700 billion, eliminated bank reserve requirements, and encouraged banks to access quick financing using the discount window.
Airline stocks bucked the trend, however, with American Airlines jumping 11% back into the green at markets’ close after Trump promised to back airlines “100%”; the industry is calling on the federal government for USD58 billion in grants and loans to hold it over through the crisis.
The stock market is now down almost 30% from its record highs just three weeks ago. Last week was its worst week since the 2008 financial crisis with massive sell-offs taking place on both Monday and Thursday—when the Dow fell 10%, or more than 2,300 points, for its worst drop since the 1987 ‘Black Monday’ market crash.