Today’s the day investors lost faith in the ability of the government and banks to control this pandemic.  Thus began a wave of panic selling at the outset that immediately triggered the fail safes and shut the exchanges down temporarily.  But the selling continued in earnest afterwards with the Dow suffering its biggest drop since 1987’s Black Monday.  The slide continued in late session with Trump’s press conference urging more social restrictions and warning of a likely pending recession.  By close the index had dropped nearly 3,000 points and the “fear gauge” ending at over 82, its highest ever closing level.  As today’s expert noted, the market is in “full panic mode.”  Volume was again extreme at nearly 16.4 billion shares traded. 

Mon   MARCH 16, 2020 /5:13 pm 

Wall Street deepens historic slump as virus response comes up short

Caroline Valetkevitch

DJ:  23,185.62  +1,985.00      NAS:  7,874.88  +673.07       S&P:  2,711.02  +230.38   3/13

DJ:  20,188.52  -2,997.10       NAS:  6,904.59  -970.28        S&P:  2,386.13  -324.89    3/16

NEW YORK (Reuters) - Wall Street suffered its biggest drop since 1987 on Monday, with the S&P 500 closing at its lowest level since December 2018, as investors fear the coronavirus pandemic is proving a tougher opponent than central banks, lawmakers or the White House are currently capable of battling.  The S&P 500 tumbled 12%, its biggest drop since “Black Monday” three decades ago, despite the Federal Reserve’s surprise move late Sunday to cut interest rates to near zero, its second emergency interest rate cut in less than two weeks and ahead of its scheduled policy meeting on Tuesday and Wednesday.  That added to alarm about the rapid spread of the pandemic and how it has paralyzed parts of the global economy and squeezed company revenue.

Stocks fell further late in the session as President Donald Trump urged Americans to halt most social activities for 15 days and not congregate in groups larger than 10 people, in a newly aggressive effort to reduce the spread of the coronavirus in the United States.   “It’s a market adrift with nothing to hold on to. There’s nothing that can really give us a sense of when the full extent of the virus’ impact will be known,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab.  Trump also warned that a recession was possible.  Most market watchers at this point are bracing for the likelihood that the economy is headed for a recession, but they said it is too early to know the full extent of the economic downturn.  Investors may be expecting a fairly deep recession but are just not sure how long it’s going to last, Kleintop said.

The Dow Jones Industrial Average .DJI fell 2,997.1 points, or 12.93%, to 20,188.52, the S&P 500 .SPX lost 324.89 points, or 11.98%, to 2,386.13 and the Nasdaq Composite .IXIC dropped 970.28 points, or 12.32%, to 6,904.59.  Trading on Wall Street's three main stock indexes was halted for 15 minutes shortly after the open as the S&P 500 index .SPX plunged 8%, crossing the 7% threshold that triggers an automatic cutout. 

The real estate sector .SPLRCR was the weakest out of the S&P 500’s 11 major sectors with a 16.5% dive, which was its deepest one-day percentage drop since 2009. The smallest loser was consumer staples .SPLRCS which sank 7% on the day.  The technology sector .SPLRCT fell 13.9%, which was a record one-day decline for the sector that was the biggest driver of the bull market.  

The Cboe Volatility Index , known as “Wall Street’s fear gauge,” ended the session at 82.69, its highest ever closing level.  Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis, speaking of the VIX, said the market was in “full panic mode.”  “Until comfort returns, panic kind of dies down, I think we are going to continue to have big moves,” he said.

Despite the intense volatility, the markets should stay open, the head of the U.S. securities regulator said, quashing speculation that the government might shut down the country’s exchanges to stop the plunge in stock prices.  Lance Pan, director of investment research and strategy at Capital Advisors group in Newton Massachusetts, said that he was trying to calm clients on Monday and noted the extra problems people were having from working from home.  “We’re flying blind and traders, even though they talk to each other, they may not see the body language, they have kids with them,” he said.

Some 16.37 billion shares changed hands on U.S. exchanges compared with the 13.51 billion average for the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 14.68-to-1 ratio; on Nasdaq, a 11.64-to-1 ratio favored decliners.  The S&P 500 posted no new 52-week highs and 341 new lows; the Nasdaq Composite recorded three new highs and 1,477 new lows.