CNBC: Dow Plunges 10% Amid Coronavirus Fears For Its Worst Day Since the 1987 Market Crash
Article by Fred Imbert & Thomas Franck in CNBC financial
The Dow Jones Industrial Average closed 2,352 points lower, or 10%. The index had its worst drop since the 1987 Black Monday market crash, when it collapsed by more than 22%. The S&P 500 plummeted 9.5%, joining the Dow in a bear market. The S&P 500 also had its worst day since 1987. The Nasdaq Composite closed 9.4% lower.
The major averages got a brief respite after the Fed announced it will ramp up its overnight funding operations to more than $500 billion on Thursday. It will then offer more repo operations totaling $1 trillion on Friday. The Fed also expanded the types of securities it would purchase with reserves.
However, stocks quickly traded back towards their session lows.
Thursday’s sell-off got so bad, that trading was halted briefly after the open for 15 minutes as markets hit the mandated “circuit-breaker” threshold used by U.S. exchanges. The Dow was on pace for the sixth-worst decline in its history, according to FactSet. Even the worst one-day drop of 2008 financial crisis did not reach this magnitude.
“We are going into a global recession,” said Mohamed El-Erian, chief economic adviser at Allianz, on CNBC’s “Squawk Box. The trouble with economic sudden stops is it’s not easy to restart an economy,” El-Erian said. He believes the selling won’t stop until the bear market hits down 30%.
The Volatility Index (VIX), widely considered the best fear gauge on Wall Street, jumped to more than 76 and hit its highest level since 2008.
On Wednesday, the Dow ended its historic 11-year bull market run by closing in bear-market territory.
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