The Dow Jones plummeted by nearly 2,000 points on Wednesday as the U.S. stock market crash gathered pace.
With a global economic and health crisis in full swing, cash is king. Bulls are even bailing out of bonds as equity and oil prices collapse in tandem.
All three of the major U.S. stock market indices suffered another mauling, but it was the Dow Jones Industrial Average that was performing the worst:
In the commodity sector, crude oil is reeling from the twin forces of historic amounts of supply and an unprecedented demand shock. Crude is currently trading down almost 19% on the day at just $22 per barrel.
“Save-haven” gold extended its decline amid the scramble for cash. The gold price shed 2% and dove below $1,500.
In an alarming dynamic for the market, Treasury yields are spiking as investors nervously eye massive stimulus programs. This helped send the dollar through the roof.
It’s official: the Trump bump is gone. Up until a month ago, the president had overseen one of the most impressive Dow Jones rallies of any administration.
But as of Wednesday afternoon, the U.S. stock market was trading lower than before Trump took office:
For Wall Street, this is not a time for politics. It is a time to panic-rush into cash. Hedge fund billionaire Ray Dalio’s “cash is trash” comments earlier in the year will likely go down in infamy.
Focusing on the bond movements that are spooking Dow bulls so badly, Nordea Research warns that we are witnessing the next phase in the developing economic crisis:
We have entered the next stage of the corona crisis. Weaker risk appetite has not been sufficient to push bond yields even lower any more in the recent days. It is not only the dash for cash that is driving the market but worries that somebody needs to buy an increasing amount of bonds to finance the ballooning stimulus measures soon. Such worries further illustrate that there are limits to how far bond yields can fall.
Financial markets continue to recoil in response to the novel coronavirus’ unrelenting spread.
The U.S. case toll has surpassed 7,000, prompting North American governments to step up containment efforts. Canada and the United States have shut their border to slow the spread of COVID-19.
The Dow 30 was devastated yet again on Wednesday as equities took the brunt of real fear on Wall Street.
Once the most heavily weighted stock in the Dow Jones, Boeing (NYSE: BA) is in free-fall. It took a 20% haircut today, plunging through the $100 handle.
News that Boeing has burnt through its loans already and is seeking a $60 billion aerospace bailout from the U.S. government has investors grappling with the once-unfathomable possibility that the century-old manufacturer will declare bankruptcy.
Chevron joined Boeing as the other member of the Dow down more than 20%.
Financial institutions Goldman Sachs (-13%) and JPMorgan Chase ( -14%) saw their stock dumped despite the rise in Treasury yields as investors fled the stock market crash almost indiscriminately.
The Dow’s most important stock, Apple, was relatively firm, down just 5% and trading around $240.
Amid the chaos, Walmart (+1.2%) and Walgreens (+4%) rallied slightly due to nationwide panic-buying of consumer staples.