TSX drops 1,700 points, Dow down almost 10% amid Trump’s Europe travel ban

The escalating coronavirus emergency sent stocks to their worst losses since the Black Monday crash of 1987, with the TSX down more than 1,700 points, or 12 per cent, and the Dow Jones was down 10% on Thursday.

The S&P 500 plummeted 9.5%, for a total drop of 26.7% from its all-time high, set just last month. That puts it way past the 20% threshold to make this a bear market, snapping an unprecedented, nearly 11-year bull-market run. The Dow Jones Industrial Average sank 10% for its worst day since a nearly 23% drop on Oct. 19, 1987.

European markets lost 12% in one of their worst days ever, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.

The heavy losses came amid a cascade of cancellations and shutdowns across the globe — including Trump’s suspension of most travel to the U.S. from Europe — and rising worries that the White House and other authorities around the world can’t or won’t counter the economic damage from the coronavirus pandemic any time soon.

“The news just continues to get worse, and the travel ban puts an exclamation point on the weakness we’re going to see in global GDP and, in turn, the U.S.,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “We’re starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn’t get better, it gets worse. It’s now has hit Main Street to a more significant degree.”

Stocks fell so fast on Wall Street at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week. The so-called circuit breakers were first adopted after the 1987 crash, and until this week hadn’t been tripped since 1997.

The Dow briefly turned upward and halved its losses at one point in the afternoon after the Federal Reserve announced it would step in to ease “highly unusual disruptions” in the Treasury market. But the burst of momentum quickly faded.

Trump often points proudly to the big rise on Wall Street under his administration and warned a crowd at a rally last August that “whether you love me or hate, you gotta vote for me,” or else your 401(k) will go “down the tubes.”

Just last month, the Dow was boasting a nearly 50% gain since Trump took the oath of office on Jan. 20, 2017. By Thursday’s close, the Dow was clinging to a 6.9% gain, though it was still up nearly 16% since just before Trump’s election in November 2016.

On Wednesday, the Dow finished the day down more than 20% from its all-time high, set just last month, officially entering what is known as a bear market for the first time in over a decade.

The combined health crisis and retreat on Wall Street heightened fears of a recession.

“This is bad. The worst and fastest stock market correction in our career,” Chris Rupkey, chief financial economist at MUFG Union, said in a research note overnight. “The economy is doomed to recession if the country stops working and takes the next 30 days off. The stock market knows it.”

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