Dow drops 900 points as inpatient investors wait for White House stimulus package to fight coronavirus impact
- US stock indices slid roughly 3% lower on Wednesday as traders waited for new details on the White House's coronavirus stimulus plan.
- Economic relief measures were expected to be announced Tuesday, but apart from reports of a payroll tax cut through November, investors are in the dark as to when stimulus could arrive and what it would look like.
- The decline wiped out most gains made in Tuesday's rebound and continued the trend of heightened market volatility amid the coronavirus outbreak and new oil-price war.
- Watch major indices update live here.
US stocks slid on Wednesday as investors mulled the timeline for the White House's potential coronavirus stimulus measures.
All three major indices tanked roughly 3% in early trading, erasing most gains made during Tuesday's rebound. The drop ushered in another day of heightened volatility from coronavirus risks and the escalating oil-market war between Russia and Saudi Arabia.
Investors initially expected stimulus details to be announced Tuesday. Markets surged through the previous session as reports revealed President Trump wanted to cut payroll taxes through the November election. The fiscal stimulus would join the Federal Reserve's early-March monetary policy boost.
The White House said Monday it was crafting a plan to bolster the US economy amid the coronavirus outbreak, but details remain scarce heading into the third trading session since the announcement.
Here's where major US indexes stood as of 10:20 a.m. ET Wednesday:
- S&P 500: 2,801.37, down 2.8%
- Dow Jones industrial average: 24,177.89, down 3.4% (840 points)
- Nasdaq composite: 8,138.00, down 2.5%
Wednesday's early trading pushed equities closer to their Monday lows. Markets plummeted at the start of the week as stock investors first reacted to the start of an oil-price war. Oil saw its worst single-day decline since the Gulf War broke out in 1991, while equities closed Monday's session with their biggest drop since the financial crisis.
The world's two largest oil exporters have only ratcheted up tensions since, issuing production bumps and price cuts to grasp market share. While lower oil prices could benefit consumers at the pump, any benefit from the price battle will be swiftly reversed by the coronavirus-driven pullback in travel activity, Bank of America economists wrote in a Tuesday note.
Goldman Sachs joined other financial giants on Wednesday in revising its S&P 500 earnings estimate lower, citing coronavirus's growing fallout and the new oil market chaos. Analysts at the firm expect the benchmark index to post its first annual profit contraction in five years as the two threats tear into corporate growth and economic activity.
The 11-year bull market "will soon end" as the global economy grapples with escalating risks, but markets should bounce back once the virus can be contained, Goldman said.
"We expect the economic weakness will ultimately be short-lived, with much of the lost activity recouped in 2021," the analysts added.
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