https://cdn.cnn.com/cnnnext/dam/assets/200305094557-03-nyse-0304-super-tease.jpg
The Dow (INDU) dropped more than 800 points, or 3%, within half an hour of the opening bell, setting up Thursday for another session of dramatic losses.
All three indexes are in correction territory, having fallen more than 10% below their peaks. They first entered a correction last week but have since bounced in and out of correction.
The roller coaster of a week has given investors whiplash. The Dow posted two of its best days in history in terms of points gained on Monday and Wednesday, and one of its worst point losses Tuesday. That has unnerved many people with stock-heavy 401(k)s, which have been whipsawed this week.
Those wild swings stem from mixed signals about the economy: The coronavirus outbreak threatens to seriously dent global growth, but how long will the downturn last?
The Fed shocked Wall Street Tuesday with an emergency rate cut to give businesses and households a boost, but what message does that send about America’s economic resilience. Former Vice President Joe Biden won sweeping primary victories across the country Tuesday, but does that mean Wall Street is about to lose its cheerleader-in-chief President Donald Trump?
CNN Business’ Fear and Greed Index has been stuck in “Extreme Fear” for more than a week. The VIX volatility index (VIX) soared more than 12% Thursday, and investors plowed money into safe-haven assets like gold and US Treasury bonds.
Gold was up 0.8% and the 10-year Treasury yield again fell below 1%, nearing its all-time low set Tuesday. The Japanese yen, also a safe-haven in times of trouble, stood near a five-month high against the US dollar.
And despite two days of huge gains this week, stocks remain near correction territory.
Stocks have gotten hammered, because investors question the underlying fundamentals of their businesses: If coronavirus keeps people at home, travel and leisure companies will lose a lot of jet-setters and concert goers, and brick-and-mortar retailers aren’t going to get much foot traffic. If manufacturers can’t get parts shipped from overseas, they won’t be able to make all their products, and if factory workers are sick, that will slow down production.
First quarter earnings could be a mess. China’s economy could post its first quarterly decline in four decades. World economic growth could be halved in 2020.
None of that is good news for stocks.
“Panic mode is clearly evident,” said Lukman Otunuga, senior research analyst at FXTM, in a note to investors Thursday. “We still don’t know the full impact on corporate earnings for 2020 and US companies will be lucky if they achieve zero earnings growth.”
Read more at CNN.com