The great 11-year bull run on Wall Street ended on Wednesday in a red-soaked session, and also ended Donald Trump’s boastful claims that he has been the one responsible for the market boom.
The President has made much of Wall Street’s rise since his election in late 2016. Now the surge has ended and investors are looking to him to report a round of stimulus after reaching an agreement with Congress.
That is starting to look unlikely as Republicans and Democrats call for bigger boosts than the ones the Administration has so far mentioned.
The Dow dropped 5.9%, marking a fall of more than 20% from its most recent peak last month (which defines as a bear market )— calling time on an 11-year bull run.
The broader S&P 500 fell 4.9% erasing Tuesday’s 4.8% jump and ending just short of a bear market. The Nasdaq shed 4.7% of its value.
The Dow Jones industrial average tumbled more than 1464 points or about 5.86%. The S&p 500 index fell nearly 141 points or 4.89% and the Nasdaq lost 4.7% or 320 points.
The S&P 500 and Nasdaq do not have far to fall to enter a bear market – around 1%.
The S&P 500 is off 19.04% from its February 19 record close. The Nasdaq is down 19% from its all-time closing high, which was also set on February 19.
Investors blamed Wall Street’s Wednesday slide on worries about the economic impact of the COVID-19 virus with its disruptions to travel and trade, along with the lack of action on fiscal stimulus by the Trump administration.
Not helping was the renewed slump in oil prices thanks to the global price war between Saudi Arabia and Russia that has hit US energy companies and amplified corporate credit worries.
European markets received an earlier a bump Wednesday after the Bank of England slashed interest rates to a record low of 0.25% to cushion the British economy from coronavirus fallout.
Like the Fed last week, the Bank of England’s cut came between meetings – ie an emergency reduction.
The 0.50% boost was well-received, but the celebration was short-lived, with Britain’s FTSE 100 and Europe’s benchmark STOXX 600 giving up early gains.
The Footsie fell 1.40%, the STOXX 600 shed 0.74%. The Italian market rose 0.33%.
News of the pandemic declaration came after most markets had ended trading across Europe.
Not even a big-spending budget from the Johnson government made a difference to investor thinking in London.
Markets and investors are now looking to tonight’s meeting of the European Central Bank to see what sort of help it can give via relaxation of monetary policy by lifting the curbs on its quantitative easing.
