Dow Jones Collapses Because New York Is Now Wuhan

Wuhan went into complete lockdown after 500 confirmed cases of the novel coronavirus Covid-19. New York City is now dangerously close to that same figure.
Posted in: Markets
Published:
March 16, 2020 11:55 AM UTC
  • The Dow Jones Industrial Average (DJIA) crashed as the U.S. stock market skidded into the first set of circuit breakers.
  • The rapid spread of Covid-19 will put the financial capital of the world on lockdown.
  • New York now has a similar number of cases as Wuhan when the Chinese city was first shuttered.

The Dow Jones Industrial Average (DJIA) crashed deeper into bear market territory on Monday. The U.S. stock market plunged at the opening bell, triggering circuit breakers to halt trading.

New York Governor Andrew Cuomo called on U.S. President Donald Trump to mobilize the military to help fight the coronavirus. | Source: Spencer Platt/Getty Images/AFP

The drop comes as New York prepares to shut down schools, bars, and restaurants. The financial capital of the world now has 329 cases of the novel coronavirus – just shy of the number in Wuhan when the city went on lockdown.

Former FDA Commissioner Scott Gottlieb urged the city to take action.

If we have a Wuhan-style outbreak in New York City, that’s going to overwhelm the system. They need to be building surge capacity right now in anticipation of that possibility.

Dow crashes as U.S. stock market slams into circuit breakers

Trading on the U.S. stock market was halted temporarily on Monday after the S&P 500 slammed into circuit breakers for the third time in a week. The selloff only accelerated after trading resumed.

  • The Dow plunged 2,755.86 points or 11.89% to 20,429.76.
  • The S&P 500 crashed 11.21% to 2,407.04.
  • The Nasdaq dove 11.21% to 6,991.94.
The Dow Jones crashed again on Monday as the U.S. stock market slammed into the first circuit breaker. | Source: Yahoo Finance

All signs point to a disastrous stock market session, despite the Federal Reserve’s second emergency rate cut.

New York to go into Wuhan-style lockdown?

New York state now has more confirmed Covid-19 cases than anywhere else in America. A total of 729 have tested positive in the state, with 329 in New York City.

Wuhan was locked down after 500 global confirmed cases.

Asked if New York City was heading for the same drastic measures, mayor Bill de Blasio said:

Every option is on the table in a crisis. We’ve never seen anything like this.

In a passionate New York Times op-ed, Governor Andrew Cuomo called on Trump to deploy the armed services.

Our best hope is to utilize the Army Corps of Engineers to leverage its expertise, equipment and people power to retrofit and equip existing facilities — like military bases or college dormitories — to serve as temporary medical centers.

New York: not enough beds

New York might be on the verge of a breakout, but it is ill-prepared. At this point in the Chinese timeline, the Wuhan government announced plans to build a dedicated hospital to treat the infected.

A deserted Manhattan street paints a picture of the outbreak of the coronavirus disease (COVID-19), in New York City, U.S., March 15, 2020. | Source: REUTERS/Jeenah Moon

Former FDA Commissioner Scott Gottlieb did the math for New York:

Remember, Wuhan was the size of New York City. At the peak of that epidemic, they hospitalized about 20,000 people. 10,000 were in serious or critical condition. 2,000 were intubated. To give you a basis of comparison, New York state — the entire state — has 50,000 hospital beds and about 3,000 critical-care beds.

Governor Cuomo said New York still isn’t testing enough people and reminded Donald Trump that America has fewer beds than other regions battling the outbreak.

Our country as a whole has fewer than one million staffed hospital beds, fewer proportionately than China, South Korea or Italy.

Dow Jones braces for economic collapse

Traders are now anticipating a full-scale shut down of the U.S. economy and widespread quarantines. Retail stores, travel companies, bars, restaurants, and local businesses will likely take the biggest hit.

The Federal Reserve tried to get out in front of the panic with an emergency announcement last night. The slashed interest rates to zero and launched $700 billion in quantitative easing.

It didn’t have the desired effect.

The futures market immediately tumbled and triggered circuit breakers. A top U.S. banking regulator during the 2008 financial crisis, Sheila Bair, explains why the Fed’s actions didn’t work:

They are throwing money in the wrong place… Lowering interest rates to zero doesn’t help if businesses can’t pay their loans back and they don’t have cash flow … We need to get help out there, especially to small businesses and people already losing their jobs.

European stocks also plunged in Monday’s session with the UK’s FTSE 100 revisiting 8-year lows.

Samburaj Das edited this article for CCN.com. If you see a breach of our Code of Ethics or Rights and Duties of the Editor or find a factual, spelling, or grammar error, please contact us.

Last modified: March 16, 2020 1:51 PM UTC

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Ben Brown @_ben_brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.