Wall Street Close: DJIA closes in bear market
- Dow Jones Industrial Average ended the session lower around 1,465 points, or 5.9%, near 23,554.
- The S&P 500 lost around 141 points, or 4.9%, to end near 2,741.
- Nasdaq fell 392 points, or 4.7%, near 7,952.
US benchmarks fell into a bear market Wednesday, although only the Dow was closing more than 20% off its all-time closing high in a broad selloff. The Dow traded at a session low of 23,606.63, below the blue-chip gauge’s all-time high set in February. The S&P 500 and Nasdaq Composite narrowly averted a bear market, with plunges attributed in part to the World Health Organisation calling he spread of the coronavirus a pandemic.
Consequently, the Dow Jones Industrial Average ended the session lower around 1,465 points, or 5.9%, near 23,554. The S&P 500 lost around 141 points, or 4.9%, to end near 2,741, while the Nasdaq fell 392 points, or 4.7%, near 7,952. It is worth noting that a bear market is widely defined as a close more than 20% below a recent peak and we had all three of the US benchmarks trading below that threshold in afternoon trade.
As for US data, the US February CPI rose 2.3% YoY vs 2.5% YoY in January. Core CPI rose 2.4% YoY. "The data were ignored by the market which is focussed on the supply and demand shock the world is facing. The plunge in breakeven inflation rates to 1.0% suggest imminent and rising deflationary risks which are being reinforced by the plunge in oil prices," analysts at ANZ Bank explained.
Focus on fiscal stimulus
"There will be a significant fiscal response across the major economies, but that will go hand-in-hand with a monetary policy response. The BOE’s surprise cut paves the way for QE, and the Fed will be at a similar juncture next week (markets are pricing in more than a 75bp cut to the last stop before zero).
The global economy will come through the COVID-19 crisis, but with the disease still in expansion mode, unfortunately QE looks more likely in the near future than an economic bounce. We expect the RBNZ to follow the Fed and BoE’s lead soon,"
analysts at ANZ explained.