The New York Stock Exchange continued to tumble Monday after the resumption of trade, interrupted shortly after opening, in full panic around the coronavirus pandemic despite the massive efforts of the American central bank to try to reassure investors.
Its flagship index, the Dow Jones Industrial Average, collapsed around 14:00 GMT from 9.51% to 20,981.67 points, after losing up to 12%. It is evolving at its lowest level since May 2017.
The highly technological Nasdaq plunged 9.37% to 7,134.45 points, and the widened S&P 500 index fell 9.28% to 2,459.33 points.
The collapse of the S&P 500 of 7% had automatically triggered, just after the start of the session, a quarter-hour trade interruption mechanism, supposed to allow market players to regain their senses.
This mechanism was already used twice last week.
If the index representing the 500 largest companies on Wall Street dropped 13%, a second stop of the same duration would take place. If he lost 20%, the session would be suspended.
Markets face extreme volatility since the start of the coronavirus crisis, which further deepened last week between the worst fall in the Dow Jones since 1987 on Thursday (-10%), and its largest increase since 2008 on Friday (+ 9.4%).
The explosion of the number of cases of contaminations in the world and the drastic containment measures imposed almost everywhere panic investors, who fear a global economic recession.
The US Federal Reserve has stepped up to the plate to try to reassure by announcing on Sunday evening in urgency a new drop in its key rate to almost zero and a vast program of repurchases of assets intended to flood the liquidity markets. The other major central banks have also taken steps to prevent financial trade from seizing up.
“The brokers are in shock, saying to themselves + if they are doing all that, it is that the situation must be really horrible +”, comments Christopher Low, economist at FTN Financial. “And the situation is really bad. It is enough to be convinced to look at the Chinese economic data. Or the number of deaths in Italy”.
“The aim of the Fed's support measures is to allow the financial system to continue to function despite a severe global supply and demand shock,” added the specialist. “No central banker thinks that monetary policy can prevent a recession.”
– Banks and airlines rolled –
“As it stands, brokers are desperately waiting for a big fiscal stimulus from the US government,” said Matthew Weller of Gain Capital.
“The very nature of the virus and the resulting containment measures cannot be regulated by monetary policy. This will require direct payments and subsidies from the federal government to help households and businesses cope while waiting for the worst of the situation is over, “he adds.
All sectors were affected Monday but despite the measures taken by the American central bank to ensure that they do not lack liquidity, the banks were particularly laminated: Bank of America collapsed by 14.57%, JPMorgan Chase of 14.09%, Goldman Sachs of 11.14% and Citigroup of 16.16%.
Airlines, hard hit since the start of the crisis, fell further, like Delta (-17.24%), United Airlines (-23.01%) or American Airlines (-15.21%).
Apple, which announced the closure of all its stores outside of China until March 27 in an attempt to contain the spread of the new coronavirus, plunged 9.84%.
On the bond market, the rate of borrowing of the 10-year debt of the United States fell again and moved to 0.773%.