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Stocks Plunge as Trump’s Travel Ban Disappoints: Live Updates
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The S&P 500 was down about 7 percent.
Here’s what you need to know:
Stocks plunge again, with S&P 500 destined for bear market.
Stocks plunged on Thursday, as President Trump’s latest effort to address the coronavirus outbreak — a ban on the entry of most Europeans to the United States — failed to address investors’ concerns about the global economy.
Trading in the United States was halted just minutes after the open when a 7 percent drop in the S&P 500 triggered a so-called circuit breaker. The halt, for 15 minutes, is intended to prevent markets from crashing.
The benchmark was down about 7 percent after trading resumed. Trading will be halted for a second time if the drop reaches 13 percent.
The waves of selling this week have left the Dow Jones industrial average and several major global benchmarks in bear market territory — a term that signifies stocks have fallen more than 20 percent from their highs. Without a substantial recovery on Thursday, the S&P 500 will end there as well.
The declines follow a spate of late news from the United States on Wednesday. President Trump announced that the United States would stop most Europeans outside Britain from traveling to the country for 30 days in an effort to slow the spread of the virus. The State Department advised Americans to reconsider all international travel. The National Basketball Association suspended its season after a player tested positive.
With global growth on the line, investors have been looking for world leaders to step in to keep the economic gears turning. Mr. Trump on Wednesday said he would extend financial relief for sick workers and would ask Congress for more. Britain has said it would spend more than $30 billion. Central banks are cutting interest rates, or taking steps to keep them suppressed.
So far, for investors, it hasn’t been enough.
On Thursday, news of the latest travel ban battered airline stocks. United Airlines, American Airlines and Delta Air Lines were all down sharply. Carnival Corp. also plunged after its Princess Cruises unit said it would suspend all cruises for the next two months as the pandemic upends the travel industry.
Shares in Europe fell more than 7 percent, following a broad fall in Asian shares.
Prices for 10-year U.S. Treasury bonds, a traditional safe haven for investors, jumped in Asian trading on Thursday, helping to keep yields near historic lows.
Oil prices were down more than 5 percent, shaken by a clash between Saudi Arabia and Russia over excessive production and by fears that the world simply does not need as much fuel as it once did.
Trading in the United States was temporarily halted. Here’s why.
About 6 minutes into the trading day in the United States on Thursday, the S&P 500 plunged 7 percent, setting off an automatic 15-minute trading halt known as a circuit breaker. Additional breakers would have been tripped at 13 percent and 20 percent.
Circuit breakers were introduced after the October 1987 Black Monday stock market crash as a way to provide time for reflection by temporarily halting the action on hectic days. The circuit breakers were revamped after the May 6, 2010, collapse in stocks that came to be known as the Flash Crash. The current circuit breakers, which were established in 2013, were set off for the first time ever on Monday.
Wall Street’s plumbing is starting to freeze up.
Conditions in bond markets have been growing dicier all week. On Wednesday afternoon, investors across Wall Street reported that Treasury bills and bonds were becoming hard to trade.
Yields swung wildly. There were few sellers and buyers for older bonds, and a huge gap between what they were asking for and offering. And while it was difficult to point to the root cause of the sudden lack of liquidity — the ability to buy and sell securities at a reasonable value — calls for help were widespread.
“Liquidity conditions in the Treasury market look troublingly poor,” economists at Evercore ISI wrote in a research note. “We think the Fed needs to act now.”
The central bank did step in on Wednesday afternoon, boosting the size of the temporary loans it has been making to eligible banks and adding ones that extend over a longer period of time. Those changes to the repurchase, or repo, operations were an attempt to keep money markets calm, the second time this week officials had ramped up their offerings.
But many investors are looking for an even more aggressive response as economic fears stemming from the coronavirus send a jolt through global markets.
“Markets are trading as if the major liquidity providers are simply stepping away from them,” said Guy Lebas, chief fixed income strategist at the investment manager Janney Montgomery Scott.
European Central Bank to step up bond buying.
The European Central Bank said Thursday it would step up its purchases of government and corporate bonds to hold down market interest rates, while expanding lending to commercial banks at very favorable terms as it tries to prevent the coronavirus from crippling the already vulnerable eurozone economy.
But the bank disappointed expectations that it would cut a key interest rate.
The central bank said that it would effectively pay commercial banks to lend to their customers as part of an expanded program designed to make it easier for smaller firms to get credit.
The bank also said it would buy an additional 120 billion euros, or $135 billion, of government and corporate bonds it buys every month as part of an effort to increase demand, drive down market interest rates and make the cost of borrowing cheaper. Currently, the central bank is buying bonds at a rate of 20 billion euros a month.
The E.C.B. and its new president, Christine Lagarde, were under intense pressure to take action after similar moves by other central banks: The U.S. Federal Reserve cut rates last week, and the Bank of England followed suit on Wednesday.
But the E.C.B. had less room to maneuver than its peers because it had already cut interest rates almost as low as they can go in an unsuccessful attempt to push up inflation to the level considered optimal for growth.
Princess suspends all cruises for two months.
Princess Cruises said on Thursday that it will suspend all cruises for the next two months as the global spread of the coronavirus upends the travel industry.
One of the first major coronavirus outbreaks took place on a Princess ship off the coast of Japan, the Diamond Princess. Eight people died and more than 700 were infected. And more than 20 people linked to a second Princess cruise ship in California, the Grand Princess, have also tested positive for the virus.
Stock in Carnival Corporation, the owner of Princess Cruises, was down about 15 percent in early trading Thursday.
“By taking this bold action of voluntarily pausing the operations of our ships, it is our intention to reassure our loyal guests, team members and global stakeholders of our commitment to the health, safety and well-being of all who sail with us,” Jan Swartz, the president of Princess, said in a statement.
Customers who were scheduled to disembark in the next two months will receive credit toward a future cruise, the statement said.
The travel ban is expected to take a deep toll on the economy.
President Trump’s decision to ban most European travelers from the United States is expected to shake tourism-dependent industries on both sides of the Atlantic Ocean, from airlines to hotels to museums and amusement parks.
It will disrupt ambitious business plans, and add to the problems of world leaders already wrestling with the relentless coronavirus outbreak and the threat it poses to jobs and livelihoods.
Shares in European airlines traded sharply lower Thursday after Mr. Trump announced that he would suspend travel from most of Europe to the United States for 30 days, with the exception of Britain and Ireland. The State Department also warned Americans that they should reconsider all international travel, the most severe caution it can offer short of “do not travel.”
Travel and leisure stocks slumped nearly 10 percent on the benchmark Stoxx 600 index, and European airline shares plunged as much as 20 percent as the sector braced for a nearly unprecedented brake on activity. Air France, Lufthansa and IAG, the owner of British Airways and Iberia, fell as much as 13 percent. Shares in Carnival, the cruise ship operator, fell to 11-year lows.
Global economy was already weakening toward recession.
This is the chief finding from a report released by the Organization for Economic Cooperation and Development on Thursday morning — a potential indication that the deadly coronavirus risks turning what was already flagging growth into a global recession.
Members of the so-called Group of 20 countries — a bloc that collectively accounts for roughly 90 percent of the world’s economic output — saw their growth slow to 0.6 percent during the last three months of 2019, down from 0.8 percent during the previous quarter, according to the report. Japan, Italy, France and Mexico all contracted.
The trend was especially pronounced in Britain, where growth slowed from 0.5 percent between July and September to zero during the last three months of the year. Growth remained unchanged in the United States, remaining at a pace of 0.5 percent expansion.
Here’s what else is happening.
The actor Tom Hanks said he and his wife, Rita Wilson, had tested positive for the coronavirus. The 63-year-old Academy Award-winning actor is in Australia, where he was set to film a movie about the life of Elvis Presley.
Australian stocks plunged more than 7 percent on Thursday, the worst drop since the 2008 financial crisis, as the government’s unveiling of a multibillion-dollar stimulus package did little to ease investors’ worries.
The rate on a 30-year fixed-rate mortgage has dropped to about 3.74 percent, and the Mortgage Bankers Association said Wednesday that refinancing applications jumped 79 percent last week.
Two California companies, CrowdStrike and FireEye, and the Israeli company Check Point confirmed this week that the Chinese groups were sending out coronavirus-themed documents loaded with malware. For now, the breaches have focused on targets in Vietnam, Mongolia and the Philippines.
Reporting was contributed by Jack Ewing, Peter S. Goodman, Liz Alderman, Alexandra Stevenson, Isabella Kwai, Keith Bradsher, Nicole Perlroth, Matthew Goldstein, Geneva Abdul and Carlos Tejada.
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