Wall Street Close: DJIA ends below 20,000 in frantic markets

In another day of extreme selling, as markets weighed the callosal fall out pertaining to the fact that consumers are on lockdown and that businesses will fail worldwide, equities plunged while the bond markets focussed on how the enormous economic support to bridge the impact of the crisis will be financed.

US benchmarks were down sharply on Wednesday as the market fears surrounding COVID-19 continue to weigh heavily on investor sentiment sending the Dow Jones Industrial Average to close below the psychologically important 20,000 level for the first time since February 2017. 

Consequently, the Dow Jones Industrial Average, DJIA, lost around 1,334 points, or 6.3%, to close near 19,904 while the S&P 500 SPX finished lower around 131 points, or 5.2%, around 2,398. The Nasdaq Composite closed nearly 345 points lower, down 4.7%, near 6,990. Once again, the S&P 500 hit a circuit-breaker in the early afternoon.

After the close, there was news that the New York Stock Exchange was to temporarily close its trading floor and move to fully electronic trading starting on Monday, March 23 due to the coronavirus.

White House to the rescue

As analysts at ANZ Bank explained, "unlimited amounts of liquidity are being provided by central banks and governments are working fast to provide the needed economic support to firms and households. Markets are taking no solace from the policy responses so far and any interim bounce in risk is being sold, including in traditional safe-haven markets like the US Treasury bond market".

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Central banks continue to innovate with fresh policy initiatives coming each day, mostly aimed at shoring up liquidity and preventing bond yields, basis spreads and curve spreads from steepening, all of which ripples down to other parts of the credit and cash markets. Dislocation is happening here and some markets are borderline dysfunctional.

DJIA levels