Financial markets spasmed, sending U.S. stocks down to levels in December 2018, as the economic fallout from the pandemic outpaces the massive response from governments and central banks.
The S&P 500 fell more than 7%, triggering a 15-minute pause. Stocks held that level as trading resumed. The next halt would occur at a 13% decline. The Dow Jones Industrial Average wiped out all the gains logged since Donald Trump’s inauguration, with investors craving more government spending to offset the impact from the virus.
Trump offered few details at a press briefing on the details his Treasury secretary is discussing with Congress. The Federal Reserve dusted off crisis-era programs to stabilize financial markets.
Treasuries were steady after the biggest yield jump since 1982 and municipal bonds extended deepest rout since 1987 as markets braced for the potential flood of spending. European bonds came in for a bashing. Oil dropped to an 18-year low. The dollar strengthened a seventh straight day, while the pound hit its lowest level against the greenback since 1985.
“The missing fundamental ingredient for a sustainable recovery in risk appetite is some evidence that the growth of global Covid-19 infection rates is peaking,” said Paul O’Connor, head of multi-asset at Janus Henderson Investors. “Clearly, we are not there yet.”
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