• Dow drops into bear market, ending longest bull run in history.
  • Dollar and Treasury yields revive, oil falls.
  • Markets await stimulus plans from the White House.

The economic stimulus package promised by the White House but not yet delivered sparked the latest selling panic in a stock market thoroughly spooked by fears of the economic effects from the global spread of the coronavirus.

All three major American equities fell sharply, erasing yesterday’s gains and bringing the Dow down 5.85% to 23,553.53 more than 20% below its high on February 12th of 29,568.57, the entry to a bear market. The S&P 500 lost 4.7%, 140.85 points, ending at 2,741.38.

S&P 500

Oil saw its largest one day decline since the Gulf War of 1991 on Monday with West Texas Intermediate plunging from $41.73 at the open as low as $27.69 before closing at $30.49 as Russia and Saudi Arabia threatened to raise production.  The price had recovered to $33.88 near the close on Wednesday.


Treasury yields fall and recover

The yield in the 10-year Treasury dropped to its all-time low on Monday at 0.498%, 89 basis points below its previous low from July 2016. By late Wednesday afternoon, the return had climbed back more than 30 basis points to 0.876%.

US 10-year yield


The dollar lost ground against the yen at 104.84, down from yesterday’s finish at 105.64 but higher than Monday’s three-year low close at 102.37. Against the euro, the greenback was essentially unchanged at 1.1277 just under Tuesday’s 1.1280 close.


A report from the Institute for Supply Management noted that 75% of respondents in its survey for the March purchasing managers indexes said that their firms had experienced supply chain delays and disruptions. 

Stimulus package delayed

But the biggest disappointment on the day was the lack of clarity from the White House and Congress on the government’s plans for a fiscal stimulus to offset the potential economic drag from the Coronavirus and its impact on GDP.

On Monday President Trump had said that he wanted to eliminate payroll taxes for employees and employers through the end of the year.  As a tax proposal, it would need to go through the House of Representatives which is controlled by the Democrats where Majority Leader Steny Hoyer declared the plan a “non-starter.”  Payroll taxes are used to fund Medicare and Social Security.

Markets had expected the plan to be outlined on Tuesday but a proposed statement by President Trump did not occur and the White House has released no details since.

The Federal Reserve cut the base rate 0.5% on March 3rd in the first emergency move since the financial crisis and is expected to reduce again next week at its scheduled March 17-18 meeting.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD skyrockets to 1.2150 on poor US jobs figures

EUR/USD has hit a new multi-month peak above 1.2150 after the US reported an increase of only 266,000 jobs in April against nearly one million expected. The dollar is under immense pressure. 


GBP/USD soars toward 1.40 after disappointing Nonfarm Payrolls

GBP/USD has been extending its gains after the US Nonfarm Payrolls badly disappointed with an increase of only 266,000 jobs in April, nearing 1.40. Earlier, sterling benefited from the UK Conservative Party's gains in local elections. 


XAU/USD soars above $1,835 after weak Nonfarm Payrolls

Gold has leaped above $1,835 after the US reported an increase of only 266K jobs in April, far below expectations. Lower US yields support the precious metal.

Gold News

Judge reaffirms order SEC must produce documents on Bitcoin, Ether and XRP in Ripple case

Ripple's victory granted the firm access to the SEC's documents on the three leading cryptocurrencies. The regulatory agency recently denied the possession of these documents.

More Dogecoin News

S&P 500 and Nasdaq: Can the Fed pump anymore after weak jobs report

Well, that was an interesting jobs report. Not too many people were forecasting that one. Just in case you missed it NFP were forecast to come in around the 1 million jobs gained but instead the US only added 266k.

Read more