The stock market opened the new trading week on Monday with a loud thud — hitting limit down overnight and triggering circuit breakers within moments of the opening bell — as investors tried to digest the coronavirus economic fallout and the Federal Reserve’s Sunday decision to slash rates to 0%.
Don’t expect extreme volatility in the markets to vanish anytime soon.
“I think we are seeing a lot of anxiety in the market,” said New York Stock Exchange CEO Stacey Cunningham on Yahoo Finance’s The First Trade. “Seeing circuit breakers hit like this is certainly unusual, they are not a protection we use very often. But we are in unusual market conditions right now and people are absorbing information and reacting to the concern and really the uncertainty.”
The S&P 500 opened more than 8% lower Monday, immediately triggering a 15-minute trading halt, launched when an index falls more than 7% from the prior session’s close. Otherwise known as a “circuit breaker”, it’s intended to prevent further immediate losses. It’s the third time in the last week in which circuit breakers have been triggered.
Even after the trading halt lifted, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite each held sharply lower. Severe declines were notched in bank stocks such as JPMorgan and Bank of America, as 0% rates from the Fed is likely to hammer profits. Investors also sent high growth stocks into a further tailspin, with Tesla and Starbucks deep in the red.
“What I think is really important for investors to understand — and for Americans to understand — is that we will have more information about how the virus will impact the country more broadly. And then I think you will see more clarity in the markets and you will see things recover,” Cunningham said.
Emily McCormick and Javier David contributed to this story.
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