Stock market crash: First data on economy shows massive decline
San José, CA – The fall in stock prices gained speed on Wall Street on Monday, March 16. By the closing bell, U.S. stocks had the largest drop since the crash in October 1987, with prices down almost 13%. The headline Dow Jones Industrial Average fell 3000 points to end just above 20,000, while the tech-heavy NASDAQ fell almost 1000 points. A circuit breaker kicked in within minutes of the market opening as the broad S&P 500 fell 7%. This led to a short-lived attempt to bounce back but in the end, stocks were just short of another trading halt at 13% down.
Stocks plummeted despite the Federal Reserve action Sunday night, the biggest since the financial crisis. Interest rates were cut by a full percentage point while the Fed restarted its longer term bond-buying program known as Quantitative Easing, or QE, to the tune of $700 billion in longer term U.S. government bonds and mortgage-backed bonds. But growing signs of economic collapse, the growing numbers of U.S. infections (up to almost 4500), and the continuing empty promises and evasion of responsibility out of Trump administration overwhelmed the desperate Fed action.
One of first official reports on the economy was horrible and much worse than mainstream economists expected. The New York Federal Reserve (one of 12 regional banks making up the Fed) Empire State Manufacturing Survey plummeted 34 points to a -21.5, showing a drop in that sector not seen since 2009. The negative reading shows a significant drop in manufacturing businesses. While a few industries such as grocery stores, pharmacies and deliveries will hold up or even do better, many others will do much worse.