NEW YORK, N.Y. – The Latest on the action in the financial markets (all times local):
A big part of the uncertainty driving the selling on Wall Street is questions how much corporate profits will be hurt by the effort to limit the spread of the coronavirus.
American Airlines, Ralph Lauren and Hilton Worldwide are among the big companies that have warned investors their finances will take a hit because of the outbreak. And that was before the Trump administration announced a travel ban to Europe going into effect Friday.
Much of the coronavirus impact on company earnings in the first quarter is likely to be restricted to their operations in March. But the outlook for corporate earnings in the April-June quarter and beyond remains cloudy at best, analyst say.
"Anyone who tells you they know how long this is going to last is wrong," said Adam Taback, chief investment officer for Wells Fargo Private Bank.
Earlier this week, Goldman Sachs predicted that earnings growth for S&P 500 companies will collapse in the second and third quarter of this year, but recover by the end of the year and into 2021.
The severity of Wall Street’s rout this week may echo the swoons for stocks at the height of the 2008 financial crisis, but that’s where the parallels end.
Back then, investors were rattled as Lehman Brothers, Bear Stearns and other big financial institutions either failed or nearly did under the weight of bad mortgages as the housing market bubble burst.
The government intervened to shore up the banking system, which eventually allowed credit to flow freely again and helped set the economy on a path toward a painfully slow but lasting recovery from the Great Recession.
This time, the financial markets are not the problem, which means the government’s efforts to limit the spread of the coronavirus are more likely to have a bigger impact on the market than fiscal stimulus, analysts say.
“This is very different from 2008, it’s a biological event,” said Nela Richardson, investment strategist at Edward Jones. “The way to resolve this, the way to get past this, is efforts to contain the virus, and that's going to be painful in the short-term.”
European stock markets have had one of their worst days in history.
The Stoxx Europe 600 index, which measures major stocks across the region, fell 11.5% on Thursday, its worst day on record. It eclipsed the 8.5% drop during the 1987 stock market crash.
Britain's FTSE 100 fell 10.9%, its worst loss since 1987. Germany's DAX plunged 12.2%, which is more than it lost after the attacks of Sept. 11, 2001. France's CAC 40 fell 12.3% and Italy's FTSE MIB dropped a massive 16.9%.
Investors worried about a U.S. travel ban that covers much of Europe and could presage tougher government limits on business activity in order to clamp down on the virus outbreak.
Some analysts also noted how European Central Bank President Christine Lagarde underscored how it was mainly up to governments, not central banks, to help the economy through the disruption of the outbreak.
The declines in Europe were part of a global sell-off. Stock markets in Asia fell between 3% and 5% while stocks in the U.S. are down around 6%.
The breadth of the market's latest sell-off is eye-popping, with the S&P 500 a sea of red.
Just three companies in the benchmark index were trading higher around midday Thursday.
Norwegian Cruise Line and Royal Caribbean Cruises took the heaviest losses. Shares of both companies have lost about three-quarters of their value so far this year as travel plans are sharply curtailed.
Marathon Petroleum and most other energy companies are also down sharply as the price of crude oil continued its week-long tumble. But two energy companies, Cabot Oil and Occidental Petroleum, bucked the trend with small gains.
The selling knocked the S&P 500 more than 20% from the all-time high it set on Feb. 19. That puts the index in danger of closing in a bear market, officially ending the bull market for stocks that began more than a decade ago.
The S&P 500's tumble from a record to a bear market would be the fastest since World War II, according to CFRA.
All 30 stocks in the Dow Jones Industrial Average are down as the index slumps again a day after it closed in a bear market for the first time in more than a decade.
Boeing is leading the rout. The airplane maker plunged 12.1% as it faces cancelled orders and other financial damage because of the virus outbreak’s impact on airlines. Travel had dropped off sharply even before Presidential Donald Trump placed restrictions on travel to the U.S. from Europe.
Home Depot, the nation’s largest home improvement retailer, slumped 9.4%.
Apple, the world’s best-known technology company, shed 6.9%. It has been facing supply chain and sales disruptions since the virus hit China. Still, Apple is holding up better than most other stocks in the S&P 500 technology sector with a year-to-date loss of 11.2%.
For the second time this week, stock prices tumbled so sharply at the opening bell a circuit breaker meant to slow down panic trading was triggered on Wall Street, halting all activity for 15 minutes.
The S&P 500 fell 7% shortly after the opening bell, triggering an automatic trading halt. Once trading resumes, if the S&P's decline expands to 13%, trading will once again be suspended for 15 minutes. If the drop eventually reaches 20%, trading will stop for the day.
Before Monday, the circuit breakers instituted after the market crash of 1987 had only been triggered once, back in 1997.
The European Central Bank is deploying new stimulus measures to cushion the economic pain inflicted by the virus outbreak.
The central bank decided Thursday to buy up 120 billion euros more in bonds, money that is newly created and injected into the financial system. It is also providing cheap loans to banks to make sure they have the liquidity needed.
It's all aimed at helping businesses get financing and stimulating activity to offset the downturn from all the closings and restrictions due to the virus outbreak.
The 19 countries that use the euro is likely facing a recession this year.
Shares of companies in the travel sector continue to struggle amid the virus outbreak as demand weakens. President Donald Trump's 30-day ban on most Europeans entering the United States seemed to heighten investors' concerns.
Airline stocks such as Delta, Jet Blue and American Air Lines fell approximately 9% to 15% in premarket trading. In Europe, shares are down roughly 6% to 9% for airlines including Lufthansa, Air France and Ryanair.
Aside from Trump's travel ban, the industry has started to reduce flights and implement hiring freezes as it looks for ways to reduce costs. Many businesses are telling employees not to travel and major sporting events and conference are being canceled or are proceeding with restricted access.
Shares of cruise operators like Carnival and Norwegian Cruise Lines dropped about 10% to 12% before the U.S. market opens, while stocks for hotel companies declined about 5% to 10%.
Dow Jones futures are down more than 1,000 points as U.S. stock markets brace for more losses Thursday after President Donald Trump's speech on the coronavirus outbreak seemingly failed to ease investors' concerns.
Futures for the Dow Jones Industrial Average were showing a drop of 5%, or 1,194 points. Futures for the S&P 500 declined 5%, or about 138 points.
On Wednesday, the Dow dropped 1,464 points, dragging it 20% below the record set last month and putting the index in a bear market. If the S&P 500 closes down more than 1%, than would put the index in bear market territory and bring an end to the longest bull market in U.S. history.
Overseas markets suffered steep losses. Most stock markets in Asia fell more than 3% and markets in Europe are seeing declines of 6% or more.