Traders work on the floor at the opening bell of the Dow Industrial Average at the New York Stock Exchange on March 18, 2020 in New York. (Photo by BRYAN R. SMITH/AFP via Getty Images)
By Stan Choe
The vicious swings keep coming for the stock market, and the S&P 500 sank more than 3 percent in early trading Wednesday to erase much of the prior day's big gain.
Markets have been incredibly volatile for weeks as Wall Street and the White House acknowledge an increasing risk of a recession due to the coronavirus outbreak. The typical day this month has seen the stock market swing up or down by 4.9 percent. Over the last decade, the typical move was just 0.4 percent.
The selling pressure swept markets around the world. Benchmark U.S. oil fell 10 percent and dropped below $25 per barrel for the first time since 2002. European stock indexes lost 4 percent following broad losses in Asia. Even prices for longer-term U.S. Treasurys, which are seen as some of the safest possible investments, fell as investors flocked to the very shortest-term Treasury debt.
It was just a day ago that the S&P 500 surged 6 percent after President Donald Trump said he's "going big" in plans to aid an economy that's increasingly shutting down by the day. The program could approach $1 trillion, and it would follow a spate of emergency actions by the Federal Reserve and other central banks to get financial markets running more smoothly.
Despite all that, investors are struggling with how much to pay for anything — stocks, bonds, oil — when it's so uncertain how badly the economy is getting hit, how much profit companies will make and how many companies may go into bankruptcy due to a cash crunch.
"These are truly unprecedented events with no adequate historical example with which to precisely anchor our forecast," Deutsche Bank economists wrote in a report Wednesday.
With all the uncertainty and early evidence that China's economy was hit much harder by the virus than earlier thought, they now see "a severe global recession occurring in the first half of 2020."
But they also are still forecasting a relatively quick rebound, with activity beginning to bounce back in the second half of this year in part because of all the aid promised from central banks and governments.
Investors say they need to see the number of infections slow before markets can find a bottom. The number of new cases reported in China, where the virus emerged in December, is declining but infections in the United States, Europe and elsewhere are increasing.
The number of infections has topped 200,000 worldwide, and the virus has killed more than 8,000.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.
The Dow Jones Industrial Average was down 828 points, or 3.9 percent, shortly after 10 a.m. Eastern time. after being down as many as 1,365 shortly after trading began. If it crosses back over the 1,000 threshold — which is not a big if given how steep swings have been within the same day — it would be the eighth straight day the Dow has moved by that much.
The S&P 500, which dictates how 401(k) accounts perform much more than the Dow, is down nearly 29 percent from its record set last month.
All the uncertainty has pushed many people toward safety. Last month, investors pulled $17.5 billion out of stock mutual funds and exchange-traded funds, even though stocks set all-time highs in the middle of the month. Money-market funds, meanwhile, drew $25.5 billion, according to Morningstar.
That was all before the market's sell-off accelerated this month, as broad swaths of the economy shut down in hopes of better containing the outbreak. Restaurants have closed to dine-in customers, planes are parked and sports arenas have been dimmed. Goldman Sachs strategists describe this month as "March Sadness."
Jason Moser, Senior Analyst at The Motley Fool, joined Wake Up With Cheddar to talk about the big takeaways from Disney's Q1 report, which showed the company nearing 130 million Disney+ subscribers as parks revenue ticks up.
The airline industry is seeing a major consolidation as Frontier and Spirit Airlines have agreed to merge in a deal valued at $6.6 billion dollars. Frontier will control just over 51% of the company, and Spirit will control the other 48%, creating what would become the fifth-largest airline in the U.S. The deal was approved over the weekend, with Spirit CEO Ted Christie saying that the merger aims to create an aggressive, low-fare competitor focused on consumer-friendly pricing. John Grant, Senior Analyst at OAG explains the gravity of the merger, and the wider impact it could have on competition and the airline industry as a whole.
Cheeze, Inc. is a media platform that hopes to help photographers to tell stories through the use of NFT’s. Simon Hudson, founder and CEO of Cheeze, Inc. joined Cheddar News to explain the process as well as teasing its "Women of Authenticity" display for Women’s History Month. "We've made it very simple and focused very hard on reducing all of the friction to bring their items to the blockchain." Hudson explained. He also addressed reports that cloud software giant Salesforce could be getting into the NFT marketplace.
President Biden's push for electric vehicles is doing more than trying to hold off climate change as it also hopes to revive American manufacturing jobs. The latest company to open an EV charging production plant in the U.S. is Australia-based Tritium, looking to open its new Lebanon, Tennessee, facility in the fall of 2022. It's expected to create at least 500 jobs in the region and reach a production capacity of 10,000 charging units per year. Jane Hunter, CEO and executive director of Tritium, joined Closing Bell to discuss the plant, production capacity, and working with the Biden administration. "The policies that they put in place have directly driven demand for our fast charging products," she said. "Discussions that we have are just incredibly positive because this administration wants to have an electric superhighway that runs all across the country so that it's open equitably for all people to drive electric vehicles."
Samsung unveiled its latest product lineup, including a new family of Galaxy S22 smartphones featuring the S22 Ultra with a larger screen, more powerful camera, and the Samsung S Pen stylus. The company also revealed its latest tablet, the Tab S8 Ultra, featuring a 14.6" screen, expanded storage, and 4K video capability. Cheddar News was able to showcase each device as Allison Johnson, reviews writer at The Verge, joined Closing Bell to discuss the new releases, the standout features, and more.
Shares of Canadian cannabis giant Canopy Growth surged after the company reported Q3 earnings Wednesday morning, with shares up more than 15 percent at the close of the day's trading session. Despite net revenue declining year-over-year, Canopy beat analyst expectations and has ramped up efforts to develop a "THC ecosystem' in the U.S. Canopy Growth's CEO, David Klein, joined Cheddar News' Closing Bell to discuss the report. He noted that its brands Storz & Bickel vaporizers and BioSteel beverages showed record growth.
Commercial property ownership platform withco recently raised $32 million across a seed and Series A funding round. The company purchases properties and then rents them back to small business owners and works to transition them into full ownership. Founder and CEO Kevin Song says withco was inspired by his family's experience of operating a Brooklyn grocery store for two decades and being forced to shutter the business due to a doubling in rent by a new landlord. Now, Song says his mission is to help small business owners become commercial property owners, in a way that's simple and affordable. Song joined Cheddar News' Closing Bell to discuss.
