· U.S. markets surge on Trump’s emergency coronavirus declaration after wild day of trading
Stocks surged Friday to end a tumultuous week marked by some of the biggest extremes in trading history. Heading into the weekend, most investors are stranded deeply in the red for 2020 and trying to sort through the economic unknowns of the coronavirus.
The Dow Jones industrial average shot to its biggest point gain ever. The blue chips closed the day up 1,985.00 points, or 9.4 percent, at 23,185.62. The Standard & Poor’s 500-stock index jumped 9.3 percent and the Nasdaq was up 9.4 percent on the day. It was Wall Street’s biggest rally since 2008.
The gains arrived after two days of misery, with the Dow losing 1,464 points on Wednesday and 2,352 on Thursday, its worst day since the 1987 crash. The sell-off came despite central banks around the world moving to shore up the economy against the coronavirus fallout, which has battered global markets for weeks.
Investors ended the week flattened, with no end to the turmoil in sight. A month ago, the 11-year bull market was still reigning and the Dow, S&P and Nasdaq were resting on their record highs. But the insidious coronavirus struck, and within a few weeks the bull market was over and all three indexes were down 20 percent.
The S&P lost 8.8 percent on the week and is down 19.9 percent in the 17 days since its all-time high. The Dow lost 10.36 percent this week and is 21 percent off its all-time high, according to S&P Dow Jones Indices. For 2020, the Dow is down 18 percent, the S&P is down 16 percent and the tech-heavy Nasdaq is 12 percent in the hole.
· Stock futures drop — hit ‘limit down’ — even as Fed slashes rates; Dow futures off 1,000 points
U.S. stock index futures tumbled after resuming trading on Sunday after the U.S. Federal Reserve slashed rates back to near zero to help the global economy and investors digested the latest fallout from the escalating coronavirus pandemic.
S&P 500 e-minis EScv1 were down 115.75 points, or 4.29%, with 33,056 contracts changing hands. Nasdaq 100 e-minis NQcv1 were down 326 points, or 4.12%, in volume of 4,176 contracts. Dow e-minis 1YMcv1 were down 842 points, or 3.66%, with 987 contracts changing hands.
Stock market futures hit “limit down” levels of 5% lower, a move made by the CME futures exchange to reduce panic in markets. No prices can trade below that threshold, only at higher prices than that down 5% limit.
Dow Jones Industrial average futures were off by more than 1,000 points, triggering the limit down level. S&P 500 and Nasdaq 100 futures were also at their downside limits.
The Fed cut interest rates down to basically zero, their lowest level since 2015. The U.S. central bank also launched a massive $700 billion quantitative easing program. President Donald Trump said he was “very happy” with the announcement, adding: “I think that people in the markets should be very thrilled.”
· European stocks close higher, but down 19% on the week in worst sell-off since 2008
European stocks closed higher on Friday, but logged major losses for the week as the rapid spread of the coronavirus pandemic continued to dominate investor sentiment.
The pan-European Stoxx 600 closed up just shy of 1%, with basic resources higher by 5.3%, autos up 1.5% and utilities up 2.7% as nearly all sectors and major bourses finished firmly in positive territory.
· Australia stocks fall more than 4% as Asia stocks shed gains; Fed cuts rates to zero
Stocks in Australia fell sharply in Monday morning trade as the U.S. Federal Reserve slashed its benchmark interest rate to zero and launched a massive quantitative easing program in an emergency move on Sunday.
The S&P/ASX 200 was down 4.67% in morning trade as the sectors declined, with the heavily weighted financial subindex dropping about 5% as shares of the country’s major banks saw steep declines.
Over in Asia, the Nikkei 225 in Japan shed earlier gains as it slipped 1.02% while the Topix index fell 1%. South Korea’s Kospi also turned into negative territory as it slipped 0.54%.
Overall, the MSCI Asia ex-Japan index traded 0.51% lower.
Investors are watching for market reaction to the Fed’s latest actions. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0%-0.25% down from a target range of 1% to 1.25%.
Following the Fed decision, U.S. stock futures fell sharply. Stock market futures hit “limit down” levels of 5% lower, a move made by the CME futures exchange to reduce panic in markets. No prices can trade below that threshold, only at higher prices than that down 5% limit.
Reference: Washington Post, Reuters, CNBC
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