U.S. stocks edge lower even as central banks roll out latest stimulus plans
U.S. markets extended their losses Thursday, with the Dow Jones industrial average sinking more than 700 points shortly after open as sweeping stimulus intervention around the world failed to ease investor fears about a coronavirus-fueled recession.
The continued slide comes despite late night announcements of a 750 billion euro bond-buying program by the European Central Bank to blunt economic pain in the euro zone and a special Federal Reserve backstop for money market mutual funds, typically a risk-free place for investors to store cash. This is the Fed's seventh major emergency action this week.
"Government resources are unlimited when they have the central bank behind them with its money-printing capabilities that know no limits," Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in commentary Wednesday night. "Investors must know the world has changed. The world's economic leaders will not rest until the financial world is on a firmer footing."
Shortly after opening bell, the Dow was down 700 points, or 3.4%, while the Standard & Poor's 500 index declined 3%. The tech-heavy Nasdaq slipped 1.7%. All three major U.S. indexes are now in well into a bear market, with the Standard & Poor's 500 falling more than 30% from its February high.
American workers are getting laid off at an unprecedented pace as the coronavirus outbreak shuts down much of the economy, with more than a million expected to lose their jobs by the end of March, economists say. Ball State University economist Michael Hicks predicts this month could be the worst for layoffs in U.S. history, a drastic reversal in a period of otherwise historically low unemployment.
Workers in hardest-hit industries - travel, hospitality, retail, restaurants - are often lower-paid and less likely to be insured, Hicks said.
"Though we don't have data available on benefits, it is near certain these workers are in occupations well known to have lower incidence of sick days, stable work hours and other forms of workplace benefits," Hicks said in comment emailed to The Washington Post. "This makes staying home from work and accessing medical treatment (or even diagnosis) difficult for infected workers. And, given the types of tasks performed by these workers, it is difficult for co-workers to maintain appropriate social distances, increasing the transmission of the virus."
Next week, the New York Stock Exchange will close its trading floors and move to all-electronic trading for the first time ever, Intercontinental Exchange announced. The electronic trading group, which owns the NYSE, said the decision comes after two people who were on the floor tested positive for COVID-19, although they have not been in the building this week. Most trading is already all-electronic, so the decision should have minimal impact on day to day transactions.