The world continues to reel from the economic avalanche caused by the rapidly spreading Coronavirus. There has been no letup for stock markets and Sunday saw a huge slide for U.S. stock futures as things go from bad to worse for financial markets.
At the same time, Wall Street is waiting on Washington to agree to an economic stimulus and rescue plan to prevent battered markets sliding even further.
U.S. Trading Hit with Limits
U.S. stock futures have been the latest casualty, slumping around 5% on Sunday hitting ‘limit down’ levels. These limits are implemented to ensure orderly market behavior once trading hits a certain threshold as no trades below that level are allowed.
According to reports the Dow Jones Industrial Average futures, S&P 500 and Nasdaq-100 futures, all fell over 4% with their quickest ‘limit down’ in history. The move was observed by economist Alex Krüger (@krugermacro), who jeeringly asked for the name for this particular chart pattern:
US stock futures – fastest limit down in history.
Lasted three minutes.
What's the name of this chart pattern? pic.twitter.com/c5udGq9gee
— Alex Krüger (@krugermacro) March 22, 2020
A fiscal stimulus bill struggled to reach consensus on Sunday as Democrats warned the measure was too weighted on helping out corporations over individuals. According to National Economic Council Director Larry Kudlow, the economic stimulus package will total more than $2 trillion, equal to roughly 10% of U.S. economic output. Treasury Secretary Steven Mnuchin added that financing programs to stimulate the economy could be worth as much as $4 trillion.
Chief U.S. equity strategist at Goldman Sachs, David Kostin, warned that damage to the economy could persist well beyond any containment of the virus. Kostin sees problems getting worse before they get better if short-term shutdowns lead to business defaults, closures, and permanent layoffs.
Stocks have suffered their biggest one-week decline since the financial crisis in 2008 and many industry experts agree that there is more chaos on the horizon.
NYSE on Autopilot
In a related development, the New York Stock Exchange is going on autopilot on Monday. This marks the first time that the exchange will operate in regular hours without human traders present.
One official called it an unprecedented move as the markets have never been opened while the trading floor remains closed.
According to Georgetown University James Angel, “The stakes are very high because the NYSE has always been in the crosshairs of the media and the slightest misstep they make will be seen by millions of people,”
Intercontinental Exchange Inc. (ICE), the NYSE parent company, said it was temporarily closing the floor last week and shifting to all-electronic trading after a trader and an employee tested positive for Covid-19.
New York has been particularly hard hit by the outbreak with over 10,000 cases in the state according to recent reports.