Wall Street suffered its fourth straight day of demoralizing losses Thursday -- the Dow Jones Industrial Average plunging 1,190 points or 4.4% -- placing it on track for its worst week since the Great Recession of 2008, and officially hurling the Dow into correction territory. The 1,190 point drop was the worst single-day loss in the Dow's history.
It's the worst one-day plunge in this horrific week: the Dow sank 1,000 points Monday, 900 Tuesday, recovered by 100 points Wednesday before nosediving 1,100 points Thursday. Friday looks set to be more of the same.
The Dow ended Thursday trading down 1,190 points, or 4.4%, after plummeting more than 900 points earlier in the session and plunging even more in the closing hours. The S&P 500 sank 4.4% while the NASDAQ Composite dropped 4.6%.
These were the worst daily losses this week. It was also the sixth straight day of losses for the S&P 500. Since February 20, the S&P 500 has plunged by 10%, which is a rate faster than it's done, according to Deutsche Bank Securities, eliminating trillions off the market's value. The Dow has fallen more than 8% from its record high set earlier this month.
Companies on the Dow board were overwhelmingly in the red with the notable exception of 3M, up a scant 0.8%, which makes protective facemasks such as the popular N95 respirators now seeing a massive worldwide boom due to Covid-19.
Apple, Inc. Intel Corporation and Procter & Gamble were among the worst-hit Dow stocks Thursday. Apple fell 6.5%; Intel lost 6.4% and Procter & Gamble, 5.5%. All three were down only 3% earlier on. AMD plunged 7.3% while Nvidia fell 5.6%.
Microsoft Wednesday said it won't meet its revenue guidance for a key segment. The reason is that its supply chain is "returning to normal operations at a slower pace than anticipated." Microsoft shares fell 7% to end the trading day. PayPal also issued a warning about its outlook and saw its stock fall 1.2%.
It was only two weeks ago the Dow and the other two indices hit new highs. The sudden and dizzying turnaround testifies to the panic-like fear gripping investors and equities markets over uncertainties as to what happens next.
Talk of a global recession within the year if Covid-19 continues unchecked until the second quarter are now getting louder and adding to the air of panic blanketing equities markets worldwide. JPMorgan Chase & Co. projects a stunning negative 4% growth for China in the first quarter due to Covid-19 that has brought much of China's economic activity to a sudden halt.
The reason for the sickening plunge Thursday: fears of a Covid-19 fast-spreading community outbreak in California, and President Donald Trump's failed effort to convince markets the coronavirus outbreak isn't inevitable and won't spread, and is really a "buying opportunity" in the words of two of his top advisers. Critics note Trump's main focus is on the U.S. stock market, whose health he sees as critical to his re-election in November.
Oil fell below $50 per barrel -- its lowest this year -- due to massive demand destruction in China and a persistent oversupply due to Russia's resistance to production cuts. China is the world's largest importer of oil. WTI fell to $46.82 while the benchmark Brent crude slid to $51.27.
Bond prices, in turn, again surged after Thursday's renewed sell-off. The benchmark 10-year Treasury yield fell below 1.25%, hitting a record low, before later rebounding.
Goldman Sachs added to the gloom by releasing a report saying S&P 500 companies will see zero profits this year due to the coronavirus effects.
"US companies will generate no earnings growth in 2020," said David Kostin, Goldman Sachs' chief U.S. equity strategist. "Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for US exporters, disruption to the supply chain for many US firms, a slowdown in US economic activity, and elevated business uncertainty."
The infection news from Italy added to Thursday's despondency. Italy reported 650 new Covid-19 cases Wednesday, its largest single day spike. Most of these new infections were located in northern Italy, which creates 50% of the country's GDP. The Italian hotel association reports a 40% drop in occupancy nationwide; Milan's hotels reported a 70% drop.
Thursday's Wall Street plunge was anticipated: stock futures Thursday morning signaled significant declines before Thursday's open, confirming the failure by Trump to talk-up Wall Street by repeatedly claiming COVID-19's risk to the American people remains very low.
As of 12:48 a.m. ET, Thursday, Dow futures fell 379 points to herald a plunge of 400.59 points at Thursday's open. S&P 500 futures and NASDAQ 100 futures also pointed to opening declines. All this came to pass, and then some.
More than 4,800 people in California are now being monitored for Covid-19 infection, according to Gov. Kevin Newsom. The first confirmed community spread of the disease was confirmed in a woman from Solano, California Wednesday. Medical experts said this development could be a turning point since it indicates the same person-to-person contact responsible for the ongoing outbreaks in Italy and South Korea is now in the United States.
"We've hit a pocket of fear," said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. "This is a big deal. ... If this flows into the U.S., we could be in trouble because let's face it, the U.S. consumer is what's holding this thing together."