A rally shortly before day's end calmed investor angst, but all three major Wall Street indices Wednesday still plunged 4% to 6% in a day that saw the Down Jones Industrial Average tumble below 20,000 points.
Trading was again halted by automatic circuit breakers after stocks fell too far, too fast. COVID-19 panic continued to shatter sentiment and stocks plunged to new coronavirus crisis lows as nervous investors continued to fret about the huge economic damage from the pandemic.
The Dow Jones Industrial Average dropped 1,338.46 points, or 6.3% to 19,898.92, its first close below 20,000 since February 2017. The Dow sank more than 2,300 points earlier in the day. The benchmark S&P 500 dropped 5.2% at 2,398.42 and closed nearly 30% below a record it set on this February It tumbled below 2,351, it's closing low during the Christmas 2018 selloff. The NASDAQ Composite yielded 4.7% to 6,989.84. No market escaped the massive selloff binge.
With yesterday's selloff, the Dow has erased all its gains attained since Donald Trump became president in January 2017.
"The American economy is poised for the worst quarterly contraction ever, with a sudden slowdown in economic activity that's more akin to what happened in wartime Europe than during previous American slowdowns like the financial crisis more than a decade ago or even the Great Depression" wrote The New York Times Wednesday.
Crude prices suffered their third-worst decline on record. The benchmark Brent crude oil prices plummeted 9.9% to $25.88 while West Texas Intermediate (WTI) nosedived 18.3% to $22.03. The price war between Saudi Arabia and Russia, which exacerbated the demand destruction already inflicted by COVID-19 shows no signs of abating.
The 10-year Treasury yield rose to 1.21% Wednesday after trading 0.77% midday Tuesday before details of the federal government $1 trillion stimuli were revealed by Trump. It began the week at 0.65%. The yield's rapid ascent in response to the $1 trillion stimulus package was unnerving.
News the Senate on Wednesday had approved the stimulus package crafted and earlier approved by the Democrat-controlled House boosted stocks off their lows in the final minutes of trading. The potential fiscal stimulus package, however, wasn't enough for investors to curb their desire to selloff quickly to avoid the worst.
"Volatility is not over yet," said Tom Essaye, founder of The Sevens Report. "We also need to see more progress on the pharma side of things, and above all else, we need the growth rate of the virus to peak in the coming weeks."
The approval by Congress of the consumer bailout package, however, did nothing to resolve the root cause of the current economic crisis -- COVID-19 and its untrammeled spread across the U.S.
As of Wednesday afternoon, there were 7,769 confirmed COVID-19 cases in the U.S. and 118 deaths. This compares to the 5,894 cases and 97 deaths recorded during the same time Tuesday. There were 1,875 more cases on Wednesday compared to Tuesday, according to data from the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University.
Billionaire investor Bill Ackman said the best remedy for the market downturn and the COVID-19 pandemic in the U.S. is for Trump to shut down the entire country.
"Hell is coming," said Ackman, founder of Pershing Square Capital Management, to CNBC. "Capitalism does not work in an 18-month shutdown. Capitalism can work in a 30-day shutdown."
"We need to shut it down now... This is the only answer. America will end as we know it. I'm sorry to say so unless we take this option."
