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Tag: stock market collapse
Wall Street Suffers Worst Decline Since 1987 Crash

Wall Street Suffers Worst Decline Since 1987 Crash

The coronavirus emergency sent stocks crashing on Thursday to their worst losses since the Black Monday crash of 1987, extending a plunge that has eliminated most of Wall Street’s big gains since Donald Trump’s 2016 election.

The Standard &Poors 500 measure fell 9.5 percent, a drop of 26.7 percent from its all-time high, set one month ago. That left the S&P well past the 20 percent threshold to signify a bear market, ending an unprecedented, decade-long bull market. Likewise, the Dow Jones Industrial Average fell ten percent for its worst day since a historic 23 percent drop on Oct. 19, 1987.

European markets lost 12 percent in one of their worst days ever, despite the European Central Bank’s promise to buy bonds.

The fall came so quickly after the opening bell that it triggered an automatic, 15-minute trading halt for the second time this week. Those “circuit breakers” were adopted after the 1987 crash, and hadn’t been activated since 1997.

The Dow turned upward briefly after the Federal Reserve announced measures to ease “highly unusual disruptions” in the Treasury market. But that respite faded before the market close.

On Wednesday, the Dow finished the day down more than 20 percent from its all-time high, set just last month, officially entering bear market territory for the first time in over a decade.

Both the coronavirus crisis and the chaos on Wall Street spurred fears of recession.

IMAGE: The New York Stock Exchange building is seen from Wall Street in lower Manhattan. REUTERS/Mike Segar

The Sky Isn’t Falling — Just Leaking

The new jobs numbers show unemployment declining slightly from 9.2 to 9.1 percent, with the economy adding well over 100,000 jobs, the minimum needed to keep pace with population growth and prevent the rate rising. After such a massive stock market collapse this week, the numbers were badly needed to stanch the bleeding.

And yet despite some initial rebounds here and abroad, markets remain stuck in neutral — and S&P, threatening to downgrade the United States’ credit rating for some time, took the plunge Friday, an unprecedented development.

Confidence has been badly shaken, and progressives are looking around and thinking for the first time in a long time that their president may be a one-termer. Political scientists love to point to the correlation between the jobs rate and presidential elections, and it is indeed strong — though real income growth seems to be the greater factor. Will Americans remember all those invisible payroll tax cuts Obama provided over the years? Invisible because they made themselves known only as small increases in take-home pay.

The economy is crying out for more fiscal stimulus, but also a more activist Fed, specifically one that sets a high inflation target and prints more money, rather than hawkishly worrying about a potential inflationary disaster that doesn’t exist. And the administration might do well to appoint some nominees to the Board of Governors and pressure that body to act.