NEW YORK (AP) — Stock trading has been halted for the fourth time this month Wednesday as S&P 500 drops 7%. Trading will resume in 15 minutes. The automatic circuit-breaker was triggered around 1 p.m. Eastern time as President Donald Trump and other officials were updating reporters on measures to combat the coronavirus. Markets have been highly volatile in recent weeks as the outbreak seems increasingly likely to cause a global recession. The price of crude oil dropped another 18% as traders anticipate a sharp pullback in demand for energy. Even prices for longer-term U.S. Treasurys fell as investors sold what they could to raise cash.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
U.S. stocks sank close to 6% in midday trading Wednesday, part of another worldwide sell-off, and wiped out the big gains and optimism that Washington had sparked the prior day with promises for massive aid for the economy.
Markets have been incredibly volatile for weeks as Wall Street and the White House acknowledge an increasing risk of a recession due to the coronavirus outbreak. The typical day this month has seen the stock market swing up or down by 4.9%. Over the last decade, it was just 0.4%.
The selling pressure swept markets around the world. Benchmark U.S. oil fell 14% after dropped below $25 per barrel for the first time since 2002. European stock indexes lost more than 4% following broad losses in Asia. Even prices for longer-term U.S. Treasurys, which are seen as some of the safest possible investments, fell as investors sold what they could to raise cash.
The S&P 500, which dictates how 401(k) accounts perform much more than the Dow, is down nearly 30% from its record set last month.
It was just a day ago that the S&P 500 surged 6% after President Donald Trump said he’s “going big” in plans to aid an economy that’s increasingly shutting down by the day. The program could approach $1 trillion, and it would follow a spate of emergency actions by the Federal Reserve and other central banks to get financial markets running more smoothly.
Despite all that, investors are struggling with how much to pay for anything — stocks, bonds, oil — when it’s so uncertain how badly the economy is getting hit, how much profit companies will make and how many companies may go into bankruptcy due to a cash crunch.
“These are truly unprecedented events with no adequate historical example with which to precisely anchor our forecast,” Deutsche Bank economists wrote in a report Wednesday.
With all the uncertainty and early evidence that China’s economy was hit much harder by the virus than earlier thought, they now see “a severe global recession occurring in the first half of 2020.”
But they also are still forecasting a relatively quick rebound, with activity beginning to bounce back in the second half of this year in part because of all the aid promised from central banks and governments.
Investors say they need to see the number of infections slow before markets can find a bottom. The number of new cases reported in China, where the virus emerged in December, is declining but infections in the United States, Europe and elsewhere are increasing.
The number of infections has topped 200,000 worldwide, and the virus has killed more than 8,000.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.
The Dow Jones Industrial Average was down 1,280 points, or 6%, as of 11:38 a.m. Eastern time. after being down as many as 1,365 shortly after trading began. If stays there, it would be the eighth straight day the Dow has moved by that much.
All the uncertainty has pushed many people toward safety. Last month, investors pulled $17.5 billion out of stock mutual funds and exchange-traded funds, even though stocks set all-time highs in the middle of the month. Money-market funds, meanwhile, drew $25.5 billion, according to Morningstar.
That was all before the market’s sell-off accelerated this month, as broad swaths of the economy shut down in hopes of better containing the outbreak. Restaurants have closed to dine-in customers, planes are parked and sports arenas have been dimmed. Goldman Sachs strategists describe this month as “March Sadness.”