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."
After an intense hours-long meltdown Monday, stocks closed higher in a last minute, stunning comeback. At one point, the Dow shed over 1,000 points, the tech-heavy Nasdaq was down close to 5% and inching toward correction territory, and the S&P 500 briefly hit a correction earlier in the day. During most of Monday's session, stocks were on track to mark their worst months since March 2020, and for the Nasdaq, since October 2008. Philip Palumbo, Founder, CEO and Chief Investment Officer of Palumbo Wealth Management, joined Cheddar News' Closing Bell to discuss today's stunning market comeback, whether there's more room for stocks to fall, his 2022 market predictions, and more.
Bobby Zagotta, CEO of Bitstamp USA, joins Cheddar News' Closing Bell, where he discusses what he expects to see from Bitcoin and other cryptocurrencies amid a volatile period in the market, and explains how his crypto exchange is helping investors.
Markets started the week on a rocky note: the major indexes at most points during the day were double digits off of their highs, on the path to their worst performances since March 2020 and for the Nasdaq, since October 2008. Investors were skittish about the Federal Reserve's meeting this week, where the central bank is expected to announce more details about its plans to hike interest rates and taper asset purchasing this year. Art Hogan, Chief Market Strategist at National Securities, joined Cheddar News' Closing Bell to discuss today's market meltdown, why investors were feeling pressure, what to expect from the Fed, and more.
AT&T announced it's offering two tiers of high-speed internet, 2 gigs, and 5 gigs, to its fiber customers in more than 70 metro regions. AT&T Consumer CEO Thaddeus Arroyo joined Cheddar to talk about the newly available speed upgrades for 5.2 million of its customers, and where the rollout goes from here. "Over the course of 2022, we'll rapidly continue to retrofit the rest of the base," he said. "And importantly now is, as we build-out, we've talked about building out to cover 30 million homes and businesses by the end of 2025, we're going to continue to ensure that every new location that we stand up has this multi gig capability."
Autonomous driving tech company Waymo is partnering with transportation and logistics business J.B. Hunt. The two firms are teaming up to bring autonomous shipping to the highways. Head of commercialization for trucking at Waymo, Charlie Jatt, joined Cheddar to discuss how the companies are combining their strengths. "We, of course at Waymo, are working on the technology side of affairs, and J. B Hunt brings critical operational and commercial expertise," Jatt said. "And together we're going to work to deploy the first fully autonomous Class 8 truck hauling goods for one of their customers in the coming years in Texas."
Amid a rough week for Peloton's stock, as well as its image — its bikes being the cause of death for two fictional TV characters now — an activist investor is calling for a change in upper management. Chief investment officer of Blackwell, Jason Aintabi, petitioned in a letter that Peloton’s CEO, John Foley, must be fired. Joining Cheddar to discuss the ultimatum, Hatem Dhiab, a portfolio manager and managing partner at Gerber Kawasaki Wealth and Investment Management noted the conditions leading to the demand for Foley's removal. "The stock is basically 85 percent below the high," he said. "I think there is some change that needs to happen, and that's just the reality."
Talent Resources Sports is partnering with ABG Entertainment to host Sports Illustrated The Party during the weekend of Super Bowl LVI, featuring musical performances by Kygo, Jack Harlow, and other guests. David Spencer and Mike Heller, co-CEOs and founders of Talent Resources Sports, joined Cheddar to discuss the details behind putting on the event. “We’re just really pumped that after all of the things that got canceled people will finally have a place to let some steam off in such an exciting moment, such a charged moment with the Super Bowl,” Mike Heller said about putting on the live event after previous COVID-related cancellations.
