U.S. stocks gave up early gains Tuesday even after the Trump administration said it planned financial support for an airline industry devastated by a drop in travel caused by the coronavirus pandemic.
The declines follow the market’s worst sell-off in more than three decades on Monday.
The Dow Jones industrial average slumped 230 points, after climbing more than 400 points following the opening bell. The Standard & Poor’s 500 dipped 0.4% after initially rising more than 2%. Both averages had their worst day since the “Black Monday” stock market crash of 1987 the prior day.
Monday’s 12% drop for the S&P 500 came as voices from Wall Street and the White House warned the coronavirus may drag the economy into a recession.
Stock futures stabilized Monday evening following news that the Trump administration plans financial support for airlines stricken by the outbreak and is pushing the Senate to enact a massive stimulus package to alleviate losses for businesses and individuals affected by the outbreak, which has infected more than 182,000 people worldwide, 4,661 in the United States.
“There are monetary and fiscal policies that are being put in place to try to ease financial market concerns, but this is ultimately a health issue,” says Tom Myers, CEO and managing partner at Bordeaux Wealth Advisors. “We’re going to need to see data that shows the severity of this virus situation is abating and getting better. Markets are assuming the worst right now.”
Coronavirus:How bad is the stock market sell-off?
The S&P 500 has shed nearly 30% since setting a record less than a month ago, and it’s at its lowest point since the end of 2018. Monday’s precipitous losses accelerated in the last half hour of trading after President Donald Trump said the economy may be headed for a recession and asked Americans to avoid gatherings of more than 10 people.
The plunge came even though the Federal Reserve on Sunday rushed to announce a new round of emergency actions before financial markets opened for the week.
Layoffs from coronavirus almost certain
“There’s a lack of demand across so many industries, it’s almost certain that there will be layoffs throughout the economy,” says Stephen Guilfoyle, founder and president of Sarge986 LLC, a family-run trading operation.
In European trading, the CAC 40 in Paris fell 0.3% after the government announced $50 billion in aid for individuals and businesses. Germany’s DAX lost 0.7%. Britain’s FTSE 100 fell dropped 0.8%.
In Asia, the Nikkei 225 in Tokyo rose to 17,011.53, while Hong Kong’s benchmark jumped 0.9% to 23,263.73. Sydney’s S&P/ASX 200 jumped, while the Shanghai Composite index sank 0.3%.