Stock trading was halted in early trading after shares plunged. It's the second pause in trading this week amid growing fears about the economic impact of the coronavirus pandemic.
The S&P 500 plunged 222 points, or 8.1%, to 2,519.49 when trading opened on Thursday, triggering a trading halt. The S&P 500 has three "circuit breakers" that kick in when stocks decline by 7%, 13% or 20% in a single trading session. It's the second trading halt this week, following a rout on Monday sparked by fears of the coronavirus' impact.
When trading resumed, the S&P 500 fell 197 points, or 7.2%, to 2,544.66. The Dow plunged 1,747 points, or 7.4%, to 21,806, while the tech-heavy Nasdaq dropped 6.4%.
President Donald Trump's speech on Wednesday night failed to reassure investors, according to Oxford Economics chief U.S. economist Gregory Daco. A selloff will push stocks further into "bear" territory after the Dow on Wednesday closed more than 20% below its peak last month. That has ended a record-long bull run that started in 2009 after the Great Recession. With Thursday's sharp decline, the S&P 500 has also entered a bear market.
"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," Daco told investors in a research note.
The ban on travel from Europe to the U.S. for the next 30 days will deliver a "massive hit" to the travel and tourism industries in the U.S., Daco said. About 10 million visitors come from Europe to visit the U.S. each month.
Travel stocks fell sharply on Thursday, with American Airlines tumbling 13% and Delta shedding 12%. Hotel chain Marriott declined 9.5%, while travel-booking site Expedia lost 15.7%.
Tax filing delay
Mr. Trump's fiscal approach to blunting the impact of the coronavirus is also raising questions on Wall Street. Part of his plan is a recommendation that the Treasury delay the April 15 tax filing deadline, which would provide relief to taxpayers who owe the IRS.
A tax deadline delay may not help the workers who most need relief, given that taxpayers who typically owe the IRS are higher-income households, Daco pointed out. About 80% of taxes owed to the IRS stem from workers who earn more than $100,000 per year, while 50% are owed by people who earn more than $250,000.
There's also concern that a delay in the April 15 tax deadline could result in a delay in tax refunds, which many low- and middle-income taxpayers count on, according to Height Securities.
"There is a concern among tax policy experts we have spoken with that a delay in tax filings could also delay the issuance of tax refund checks, which represent a significant source of income for many Americans," Height Securities noted.
Mr. Trump's measures failed to mention some of the remedies that investors believe could provide targeted relief to those most hurt by the disease, Daco said.
"Financial markets were disappointed by the absence of concrete measures targeted at the most affected populations including paid sick leave, enhanced unemployment insurance, free coronavirus testing, enhanced supplemental assistance programs, and support for health care workers," he noted.