Markets are poised to extend their worst streak since the 2008 financial crisis, with major benchmarks plunging in panic selling related to the coronavirus outbreak. The illness continues its spread across multiple countries, with Nigeria and Mexico reporting their first cases, and the death toll mounting in places like Italy and Iran.
The Dow is coming off its worst-ever point drop, while the S&P 500 Index plummeted into a correction at a historically rapid pace. Meanwhile, calls are growing for central banks and governments to coordinate a policy response.
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1:40 p.m. ET: Hotel Negative Rates costs visitors a cool $14T
Deutsche’s Torsten Slok is becoming indispensable with his charts. His latest shows that negative-yielding debt (a hobby-horse of President Donald Trump’s) is now around $14 trillion — which means lucky investors are paying institutions to hold their money safely:
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1:00 p.m. ET: Goldman sees ‘short-lived’ growth pullback
Goldman Sachs expects the coronavirus to see a “continued slowdown” in Chinese infections that will see the local economy spring back. Yet it says supply chain disruptions will persist, and consumer spending will take a hit:
Our analysis shows effects on quarter-on-quarter annualized global GDP growth of -5pp in Q1 and -2pp in Q2, followed by a rebound in the second half of 2020, leaving our full-year global growth forecast at about 2%. All else equal, this would imply a short-lived global contraction that stops short of an outright recession.
Amplifying calls for Fed action, the bank also expects some global easing — which includes a 75 bp cut by the Fed that between March and June. “Although moderate Fed rate cuts are unlikely to be very powerful, the committee will probably be reluctant to disappoint market expectations for substantial rate cuts for fear of tightening financial conditions further,” Goldman said.
Noon ET: Stocks claw back losses
Markets are off their lows, but with no real change in the coronavirus outlook, the comeback isn’t likely to last. Apple (AAPL) and Microsoft (MSFT) have rebounded strongly, helping to yank the Dow off its troughs — but in an odd turn of events bullion is also being dragged lower:
S&P 500 (^GSPC): 2,917.40, off 61.36 or -2.06%
Dow (^DJI): 25,089.70, off 676.94 or -2.63%
Nasdaq (^IXIC): 8,460.80, off -105.68 or -1.23%
Crude oil (CL=F): $44.94, down $2.15 or -4.57%
Gold (GC=F): $1,593.70, off $48.80 or -2.97%
10-year Treasury (^TNX): yielding 1.1630, off -0.1360
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11:25 a.m. ET: Canaccord: Enough selling already
This week’s bloodbath in markets has some looking for a bottom. While we haven’t reached it yet, investment firm Canaccord sees “significant evidence” that an oversold rally is on the way:
We got the correction we have been looking for, the market has now become washed out enough to generate a meaningful reflex rally, but at some point in the next month we expect the major market indices to test the lows. As they do, our more intermediate-term indicators should be quite oversold/pessimistic and it is at that point we plan to put more offense back on the field.
For now, just expect a sharp snapback rally that will likely be tested, which should prove a terrific buying opportunity given the fundamental backdrop of an easy Fed, historically low rates, full employment, and widely available credit.
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10:35 a.m. ET: WHO declares coronavirus a “global level” threat
Via Reuters, the risk of spread and impact of the coronavirus is now very high at a "global level,” according to World Health Organization chief Tedros Adhanom Ghebreyesus.
It underscores the gravity of the situation, given that the WHO has shied away from declaring a full-fledged pandemic, but it doesn’t tell investors anything they didn’t already know. Stocks are off their lows, but deep in negative territory.
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10:20 a.m. ET: Coronavirus impact could be ‘as bad as the financial crisis’
The market is firmly in the red, with coronavirus fears hammering investors. At one point, the Dow (^DJI) shed another 1000 points before stemming some of those losses, but all major benchmarks — including the S&P 500 (^GSPC) and the Nasdaq (^IXIC) — are all down by over 3%.
Capital Economics thinks the global economy’s shift toward services may come back to haunt global growth, and that means the outlook is...bleak, to say the least:
A key risk to economic activity is people avoiding public places like restaurants and cinemas, and these sectors make up a bigger share of global activity than a few decades ago. The structural changes in the global economy therefore make it more vulnerable to flu pandemics than in the past, underlining our view the economic effects of a severe pandemic could be as bad as those of the global financial crisis.
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9:45 a.m. ET: Debate heats up over what the Fed should do
Should central banks intervene to stem the market’s rout? It’s unclear what, if anything, another rate cut could do in an environment of already cheap liquidity (Japan and Europe already have negative rates), but calls are growing for the Federal Reserve to cut rates (no doubt President Donald Trump would be delighted).
Highlight: What should the Fed do, in response to this selloff? “This is what we need to do, gang,” @Sarge986 says. Here’s his proposed plan: pic.twitter.com/xyQsGrWU3m
— Yahoo Finance (@YahooFinance) February 28, 2020
On Friday, at least two current and former Fed officials said the growing coronavirus panic might warrant some action. However, Bleakley’s Peter Boockvar has a different take:
While rational people can argue whether the Fed should cut or not, what do you possibly think the ECB and BoJ can do with monetary policy with rates already negative (which has damaged bank profitability) and QE already ongoing?
My viewpoint... is that there is nothing that will be 'stimulated' monetarily from a rate cut or two that isn't already being 'stimulated' by the very low rate environment. And rate cuts aren't a vaccine and won't bring factories back and people traveling again.
If the purpose is to respond to the 'tightening of financial conditions', aka try to lift the S&P 500 and narrow credit spreads, I ask this question. What would be worse, a Fed that tells us that they will do nothing right now and wait to see how this virus plays out or they 'do something', the markets rally for a few days or weeks and then goes right back down again in response to the underlying economic fundamentals like they did in response to the last two rate cutting cycles in 2000-2002 and 2007-2008? I'd argue the latter would be worse.
He may have a point. As one market participant told The Washington Post on Friday, “central banks don’t make vaccines.”
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9:30 a.m. ET: Stocks open sharply lower and extend historic rout
Here were the main market moves, as of market open:
S&P 500 (^GSPC): -2.84% or -84.73 points to 2,894.03
Dow (^DJI): -3.08% or -793 points to 24,973.64
Nasdaq (^IXIC): -4.61% or -414.29 points to 8,566.48
Crude oil (CL=F): -4.25% or -2.00 to $45.09 a barrel
Gold (GC=F): -0.97% or -15.90 to $1,626 per ounce
Mexico confirmed its first case of coronavirus Friday morning sending the markets deeper into a correction. The Dow opened lower by nearly 800 points after tanking nearly 1,200 points Thursday.
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7:10 a.m. ET: Stock futures plunge; Dow futures sink 265 points
Stock futures pointed to more pain ahead for markets Friday to cap off a brutal trading week, as the deadly coronavirus rocked sentiment around the world.
Here were the main pre-market moves, as of 7:10 a.m. ET:
S&P 500 futures (ES=F): 2,928.50, down 28.50 points or 0.96%
Dow futures (YM=F): 25,286, down 266 points or 1.04%
Nasdaq futures (NQ=F): 8,306.25, down 76.50 points or 0.91%
Crude oil (CL=F): $45.80 per barrel, down $1.29 or 2.74%
Gold (GC=F): $1,630.80 per ounce, down $11.70 or 0.71%
Thursday, the S&P 500 and Dow entered a correction, or fell more than 10% from their recent highs. The Dow tumbled nearly 1,200 points for its worst day ever, and the index is now on pace to close out its worst week since October 2008.
There are nearly 84,000 confirmed cases of coronavirus globally and more than 2,800 confirmed deaths. Japan has declared a state of emergency and Switzerland has banned gatherings of more than 1,000 people. The World Health Organization has yet to declare the outbreak as a pandemic, but officials warned Thursday it certainly has the potential to earn that label.
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Thursday, Feb. 27, 2020, 6:30 p.m. ET: Stock futures point to another volatile session Friday
U.S. equity futures initially suggested more volatility could come to the U.S. markets when they reopened on Friday.
On Thursday evening shortly after 6 p.m. ET, Dow futures (YM=F) were down 0.3%, S&P futures (ES=F) were down 0.4%, and Nasdaq futures (NQ=F) were down 0.3%.
By around 6:30 p.m. ET, contracts for the three indices had turned positive.
Financial markets plunged for the sixth consecutive day on Thursday, with coronavirus fears shaving over 1,100 points off the Dow (^DJI) — its biggest in history — and sending the S&P 500 (^GSPC) swooning to its fastest-ever correction.
“Global markets were down $1.83 trillion today, with the U.S. down $1.33 trillion,“ S&P Dow Jones’ Howard Silverblatt said in an email. He added that over the past six days, global markets erased $6 trillion in wealth with U.S. markets losing $4 trillion.
Investors took fright amid the first coronavirus case in the U.S. involving a person who didn’t travel to an infected country and didn’t knowingly interact with someone who did. Meanwhile, California’s governor said the state is monitoring more than 8,400 people who could possibly have the virus.
The virus continues to spread globally, with more than 82,000 cases and more than 2,800 deaths. The world’s biggest hot spots outside of China include Italy, South Korea, and Iran, where the death rate is higher than other hard-hit areas. Experts are becoming increasingly resigned to a worldwide spread of the disease, even as China’s new infections slow.
All of those developments hammered global markets.
The last six days saw the S&P 500 drop by 10% from its all-time high at rate faster than it ever has before, according to Deutsche Bank Securities.
*To be clear, a “correction” is characterized by a 10% decline from a recent all-time high. And so, while Black Monday (Oct. 19, 1987) saw the market crash in a single day, the peak in that cycle actually occurred two months earlier in August.
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4:00 p.m. ET: Dow drops more than 1,100 points after news California is monitoring thousands of possible cases
S&P 500 (^GSPC): -4.42% or -137.63 points to 2,978.76
Dow (^DJI): -4.42% or -1,190.95 points to 25,766.64
Nasdaq (^IXIC): -4.61% or -414.29 points to 8,566.48
Crude oil (CL=F): -4.90% or -2.39 to $46.34 a barrel
Gold (GC=F): -0.10% or -1.60 to 1,641.50 per ounce
10-year Treasury (^TNX): -0.84% or -0.0110 to 1.2990
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https://finance.yahoo.com/news/stock-market-news-live-updates-february-28-2020-234447699.html
2020-02-28 18:47:00Z
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