U.S. stock futures tumbled by more than 4% Wednesday evening, indicating that Wall Street was poised to extend its grim sell-off, after President Donald Trump announced new plans intended to contain the human toll and economic impact of the worsening coronavirus outbreak that has whipsawed global markets.
In a televised address, Trump said he was planning to suspend travel from certain areas of Europe to the U.S. for the next 30 days. He also announced plans for $50 billion of low interest loans to affected businesses and suggested a delay in the April 15 tax filing deadline.
Following the address, contracts on the S&P 500, Nasdaq 100 and Dow sank to their limit-down levels to trigger so-called circuit breakers to prevent further losses.
“President Trump’s address to the nation was symptomatic of the lack of policy coordination in the face of a global coronavirus pandemic,” Oxford Economics’ Gregory Daco said. “Markets reacted negatively to what was perceived as a solemn but confused speech that placed blame on other nations, omitted to focus on immediate actions to relieve the most affected individuals, and lacked in concrete fiscal and health measures to address the economic and financial impact of the virus.”
U.S. equity futures tumbled and sent the S&P 500 (ES=F), Dow (YM=F) and Nasdaq (NQ=F) deeper into the red. As of 2:45 a.m. ET on Thursday, Dow futures were down around 1,000 points or 4.3% — suggesting major benchmarks were in for yet another day of bloodletting at Thursday’s opening bell.
The selloff suggests investors were hoping for much more.
“2 hours [before the speech], with Australia launching financial crisis level plans, I had brief visions of country by country launching what looked like coordinated fiscal stimulus,” Academy Securities’ Peter Tchir said. “I’m disappointed with what we got…”
Some analysts were a bit more alarmed.
“The U.S. limiting entry to foreign nationals from Europe has the potential to cause another world depression again even if it is for reasons that seek to stop the spread of the coronavirus,” MUFG economist Chris Rupkey said. “Business activity is going to hit the brakes around the world and stock markets around the world are in freefall as the spread of this deadly pandemic virus has the potential to slow the global economy to a crawl.”
Trader Michael Gallucci works at his post on the floor of the New York Stock Exchange, Wednesday, March 11, 2020. (AP Photo/Richard Drew)
Other proposals under consideration by the Trump administration included a payroll tax cut and expanded worker protections, to help counteract any economic fall-out from the ongoing coronavirus outbreak.
While some of these ideas have been met with resistance in the House, Eurasia Group’s Todd Marino wrote late Wednesday that “the snowballing impact of the coronavirus in coming weeks, combined with a White House push, will likely result in bipartisan alignment—rare in an election year—on [a] big-bang stimulus.”
The World Health Organization officially designated the coronavirus outbreak a pandemic on Wednesday, as the virus spread across more than 100 countries and infected well over 100,000 individuals. The Dow extended its losses during the U.S. trading session on Tuesday following the announcement.
Weeks of panic-driven selling has dragged blue-chip stocks into bear market territory at a breathtaking pace, of less than a month from peak to trough. The Dow shed 1,464.94 points during the session, or 5.9%, sending it more than 20% below its recent high from February and into a bear market.
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9:09 a.m. ET: Apache slashes dividend, capital spending as oil prices slide
Apache Corp. (APA) said Thursday it will cut its dividend and capital spending plans for the year in the wake of a precipitous decline in crude oil prices.
Shares of Apache, which had been down 60% from Friday’s through Wednesday’s close, tumbled another 15% in early trading following the announcement.
Apache’s dividend reduction brought the payout down by 90% to 2.5 cents per share each quarter, from 25 cents previously. The energy company also said it would reduce its 2020 capital investment plan to a range of $1.0 billion to $1.2 billion, down from a previous range of between $1.6 billion and $1.9 billion. Apache’s number of drill rigs operated in the Permian Basin will be cut to zero.
The move mirrors that of other U.S. shale producers earlier this week, which have been frantically updating their investment and dividend payout plans this week to cope with the stunning plunge in oil prices earlier this week. Peer energy giant Occidental Petroleum Corp. (OXY) on Tuesday had slashed its own dividend by nearly 90%, and cut its capital spending plans by as much as 35% for the year.
“We are significantly reducing our planned rig count and well completions for the remainder of the year, and our capital spending plan will remain flexible based on market conditions,” Apache CEO John Christmann said in a statement. “We are also further reducing operating and overhead costs as we continue to implement our corporate redesign program, which began in the fall of 2019. These decisive actions will benefit Apache as we navigate these challenging market conditions.”
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9:03 a.m. ET: Carnival halts Princess Cruises for 60 days amid coronavirus
Princess Cruises, owned by parent company Carnival (CCL), will temporarily pause global operations of its 18 cruise ships for 60 days, or from March 12 to May 10, the company said in a statement Thursday.
Shares of Carnival were halted in early trading ahead of the announcement. The stock tumbled 23% after shares reopened for trading, putting it on pace for its lowest price since 2009.
“Princess Cruises is a global vacation company that serves more than 50,000 guests daily from 70 countries as part of our diverse business, and it is widely known that we have been managing the implications of COVID-19 on two continents,” Jan Swartz, president of Princess Cruises, said in a statement.
“By taking this bold action of voluntarily pausing the operations of our ships, it is our intention to reassure our loyal guests, team members and global stakeholders of our commitment to the health, safety and well-being of all who sail with us, as well as those who do business with us, and the countries and communities we visit around the world,” he added.
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7:37 a.m. ET: Stock futures trigger circuit-breakers as investors brace for another volatile session
Futures for the S&P 500, Dow and Nasdaq each traded more than 4% lower Thursday morning, after briefly hitting their limit-down levels late Wednesday for a second time in this week.
At the lows of the overnight session, contracts for each of the three major indices dropped some 5%, plunging enough to trigger circuit breakers to prevent further losses. The limit-down level is established each day by the Chicago Mercantile Exchange. The indices’ futures can still trade at or above the limit-down level.
Here were the main moves in markets as of 7:37 a.m. ET:
S&P 500 futures (ES=F): 2,606.25, down 134 points or -4.89%
Dow futures (YM=F): 22,344.00, down 1,231.00 points or -5.22%
Nasdaq futures (NQ=F): 7,608.5, down 395 points or -4.94%
Crude oil (CL=F): $31.05 per barrel, down 5.85%
Ten-year Treasury note: yielding 0.722%, down 10 basis points
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