A press conference with President Trump on Monday afternoon sent an already crashing market right on through a trapdoor.
The Dow Jones Industrial Average plunged nearly 3,000 points Monday with selling pressure accelerating into the close as Trump gave the nation an update on the coronavirus. “The President’s press conference where he said this virus could cause disruption into August was longer than many anticipated. Of course, no one knows, but that was a wakeup call for some investors who thought this may be much shorter in nature,” SunTrust chief markets strategist Keith Lerner told Yahoo Finance via email.
Other experts agreed with that as the trigger point for the swift selloff over the final 30 minutes of trading.
“The whole thing is about how long this lasts. It’s the most important variable in the market by a mile,” said Sevens Report Research founder Tom Essaye via email. “Trump saying July or August is way past what the market was thinking. If that’s true the economic pain will be much worse than the market was expecting — we are going to need bailouts everywhere if that’s the case.”
Further damaging frail market sentiment was the president suggesting the U.S. may be headed into a recession. Trump’s promise of a “backstop” for airlines struggling to deal with the economic fallout of coronavirus did little to soothe investor psyche.
To be sure, today’s session had all the making of a historic one from the get-go.
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 past week in which circuit breakers have been triggered.
Stocks made a feeble rally attempt intraday, but it proved short-lived. Shares of household names such as Macy’s, Ford, Microsoft, General Electric and Tesla all got slammed.