The major Wall Street indices were widening their losses Wednesday after the resumption of trade, the Dow Jones temporarily losing more than 10%, investors worried about the consequences on the economy of the coronavirus despite the billions put on the table by the authorities.
Around 6:00 p.m. GMT, the flagship index of the New York Stock Exchange collapsed from 9.68% to 19,183.61 after losing up to 10.3% a few minutes earlier.
It thus falls below the level at which it was evolving the day of the coming to power of Donald Trump, January 20, 2017. Bad news for the tenant of the White House, who until recently made good health of the American economy and financial markets one of its main campaign arguments.
The Nasdaq, with a strong technological coloring, fell by 8.16% to 6,736.50 points.
The broad S&P 500 index lost 8.90% to 2,304.08 points.
The exchanges were interrupted for fifteen minutes when the latter fell by 7% during the session, automatically triggering a quarter-hour trade interruption mechanism, supposed to allow market players to recover their spirits.
This is the fourth time that this mechanism called “circuit breaker” has been used since last Monday.
If the index representing the 500 largest companies on Wall Street dropped 13%, a second stop of the same duration would take place. If he lost 20%, the session would be suspended.
“The heightened anxiety over the spread of the COVID-19 pandemic continues to be the main driver of global markets,” said analysts at Charles Schwab. “The fall continues despite the flood of interventions from central banks and the ongoing preparation of a massive fiscal stimulus plan in the United States,” they add.
The increase in the number of cases of contaminations of coronavirus, the disease having now affected more than 200,000 people worldwide, and the drastic containment measures imposed everywhere, panic investors.
They were also shaken Wednesday by the rise in the rate of the debt of the United States to 10 years, sign of a lesser demand for this asset usually considered as a safe haven. The latter moved at 1.14% against about 0.7% Monday evening.
“In addition to the stampede on the stock markets, generated by the fear of the economic consequences of the measures of containment vis-à-vis the coronavirus instituted by the largest economic powers, the bond markets around the world seem to have lost confidence in the capacity of governments to finance the budget support measures they are proposing, “notes Carl Weinberg of HFE.
In addition to the exceptional measures taken by central banks, led by the Federal Reserve, governments are indeed announcing new actions every day. In the United States, the Secretary of the Treasury pleaded Wednesday for a plan amounting to 1,300 billion dollars.
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