U.S. stocks plunged lower Thursday as investors feared that stimulus measures would be inadequate and likely come too late to prevent the economy from slipping into a recession.
The Dow Jones Industrial Average fell by nearly 10 percent, near its intraday lows. It was the worst day for the blue chip index since it crashed 22 percent in October 1987. The S&P 500 fell 9.5 percent. The Nasdaq Composite dropped 9.4 percent.
The Russell 2000 index of smaller companies fell 10.55 percent.
Stock trading on the New York Stock Exchange was briefly halted for the second time this week when, minutes after opening, the S&P fell below the 7 percent threshold that triggers market circuit-breakers. Overnight, futures hit trading curbs for the second time when they indicated a 5 percent decline from the previous close.
The Federal Reserve announced a massive intervention, promising to inject an additional $1.5 billion into the repo market this week, bringing its total repo operations up to $1.62 trillion for the week. The Fed also said it would continue to inject liquidity into the market at that elevated level every week for the remainder of the month.
That proved inadequate to reassure markets, however. Many investors think direct fiscal intervention is necessary to support the economy but worry that political fighting in Washington, D.C. may lead to an ineffective or overly delayed response from the federal government.
President Donald Trump proposed a package of economic measures Wednesday night but indicated that he had not yet won support for them from Capitol Hill lawmakers. Many investors worry that even the president’s package, which included $50 billion of aid to small businesses and payroll tax relief, may stall out on Capitol Hill or may not be enough to prevent an economic meltdown. Democrats proposed their own package–but this was quickly criticized by both President Donald Trump and some Republican lawmakers.
Investors were battered by bad news about the coronavirus pandemic Wednesday night and Thursday. The NBA said it was suspending the season, Major League Baseball suspended spring training and said it would delay opening-day, museums around the country announced they would close, and New York said it would ban gatherings of more than 500 people.