Is this anyway to start the week? Just seconds after trading began in the stock market today, stocks went limit down as the S&P 500 fell more than 7%. It triggered a 15-minute trading halt as a result.
So far, the trading halts have seemed to calm investors to some degree, as the selling has not escalated significantly from that point. That was the case on Monday for most of the session, but it did not hold into the close.
The SPDR S&P 500 ETF (NYSEARCA:SPY) still cratered 11.1% on the day, while the Dow Jones Industrial Average shed 2,999 points and the Nasdaq Composite fell 12.3%.
Thursday was a brutal session, with stocks falling almost 10%, while Friday was unimpressive until the final 30 minutes of trading spiked equities into the close. Monday was simply a continuation of what we were seeing last week, save for that Friday afternoon spike.
Fight the Fed?
Almost every investor is well aware of the prior bull-market mantra by now: “Don’t fight the Fed.”
After recently announcing an emergency 50 basis point cut, the Federal Reserve took further action on Sunday night. It took rates down to zero, the lowest since the financial crisis, while launching a $700 billion quantitative easing program. The Fed is also expanding its repo operation.
Some investors worry that the Fed is quickly running out of ammo. But right now, the Fed has one goal in mind: Keep credit and cash flowing through the system. If this flow seizes, then there will be serious complications in the financial markets.
Our banks are much more capitalized than they were during the financial crisis in 2008 and our real estate market is not built on fluff. And yet, here we are. Simply put, our system is not built to have rapid freezes of credit and cash. It’s why so many assets are displaying so much volatility right now.
For now, the Fed is doing everything it can to prevent that. It’s being done in a concerted effort with other central banks. I wouldn’t fight it long term, but most investors are still opting to sell first and ask questions later.
Movers in the Stock Market Today
Over the weekend, Apple (NASDAQ:AAPL) announced it will close all of its retail locations outside of China. How’s that for irony? On the downside, that’s a pretty big move from one of the market’s largest companies. That’s from both a market capitalization and psychological perspective. On the plus side, China has recovered from the coronavirus enough to warrant regular operations. At least for Apple.
However, the wake is being felt throughout retail. Nike (NYSE:NKE), Lululemon (NASDAQ:LULU) and Urban Outfitters (NASDAQ:URBN), including its brands like Anthropologie and Free People, closed down their retail stores. Abercrombie & Fitch (NYSE:ANF), Under Armour (NYSE:UA, NYSE:UAA) and others also joined that list.
Las Vegas also has some major closings. MGM Resorts (NYSE:MGM) decided to shut down all casinos and hotels, including the Bellagio, Mandalay Bay, MGM Grand, The Mirage and others. Wynn Resorts (NASDAQ:WYNN) will also close its properties.
However, the largest U.S. banks are expected to make it through this rough market, according to Treasury Secretary Steven Mnuchin. Eight big banks suspended buybacks for the first half of 2020 after the Fed cut rates down to 0%.
The coronavirus continues to dominate the headlines. Overall cases currently reported are up to 181,000 and that figure is growing by the minute. Italy had 3,233 new cases today, bringing its number up to 27,980. As Spain and France have growing numbers daily, they decided to place their countries under lockdown.
The U.S. case count is growing quickly, while cities and states are starting to shut down sit-down restaurants and other places such as movie theaters, gyms and libraries. Many hotels and resorts are closing their doors all around the world along with casinos.
It’s an uncertain time for everyone but the measures to contain this virus from spreading even further are being taken throughout the nation.