MANHATTAN (CN) – Minor gains were once again wiped clean Wednesday as markets in the United States and abroad tumbled.
U.S. futures, which have been a fair predictor of where U.S. markets would open each day, fell about 4% overnight, at one point hitting their 5% “limit -down” thresholds.
At opening bell, the Dow Jones Industrial Average immediately fell more than 1,200 points, losing 6% of its value. The S&P 500 and Nasdaq also lost about 5%.
The president and White House officials have been trying, mostly in vain, to calm investors. On Tuesday President Trump promised that once the “invisible enemy” of coronavirus is dealt with, the U.S. economy will “pop back like nobody’s ever seen before.”
Treasury Secretary Stephen Mnuchin, who has been working nonstop with the Senate to pass a stimulus package, said there are no plans to close U.S. markets but he said trading hours could be reduced.
Mnuchin has stressed the need to pass the estimated $1.2 trillion stimulus package urgently, reportedly telling lawmakers that unemployment could spike to a Depression-level 20% without a government bailout.
“In different times we’ll fix the deficit, this is not the time to worry about it,” Mnuchin said on Capitol Hill. “This is the time where hard-working Americans are impacted by government decisions, [and] that’s when the government has to step up.”
The stimulus package would likely include paid sick leave and medical leave for affected workers. The package also would set aside $50 billion to help the ailing airline industry, as well as payments to small businesses.
A payroll tax holiday — something the president has pushed for strongly — seems to be on the back burner, Mnuchin indicated, with immediate payments to workers more likely. Telehealth services will also expand so as to limit exposure to the virus.
News of the stimulus helped markets climb back up yesterday, with the Dow Jones finishing 5% up for the day and the S&P and Nasdaq closing a point higher.
The markets still are significantly down from a month ago, hitting several benchmarks along the way.
On March 11, the longest bull market in U.S. history ended, with massive sell-offs among investors.
After the president announced a national emergency on March 13, markets rallied and recorded the largest one-day percentage increase since October 2008.
The Dow also twice set a new record for the worst day since 1987’s Black Monday crash: on March 12, after the New York Federal Reserve promised $1.5 trillion in short-term lending; and again on Monday, after a somber President Trump said the virus could last through August.
The president has grown progressively more serious about the coronavirus. Earlier in the year Trump said the hysteria over the virus was a “hoax” and another attempted to essentially impeach him, then later claimed it was “under control.”
On Tuesday, however, he said he always thought coronavirus was a pandemic.
COVID-19, the new strain of coronavirus responsible for a global pandemic, has now affected more than 204,000 worldwide and about 6,500 confirmed throughout the entire United States, according to data compiled by Johns Hopkins University.
An estimated 8,200 — with now more than 100 deaths in the United States — have died globally from the virus, data show.
The virus has taken a massive toll on everyday life, with several states imposing curfews and limiting gatherings to as few as 10 people.
Many schools have been closed for the foreseeable future, and it’s anybody’s guess when they would reopen, if at all.
California Governor Gavin Newsom said schools in his state would likely stay closed for the rest of the academic year. “Boy, I hope I’m wrong, but I believe that to be the case,” Newsom was quoted as saying by the Politico.
Unemployment is expected to soar as many blue-collar workers have been laid off as restaurants, bars and other businesses have been forced to shutter.