Stock Market Crashes, Trading Halts Briefly: NPR

Shares continued their decline on Thursday amid growing fears of the coronavirus. Trading was briefly halted after the S&P 500 index fell 7% in the first few minutes of trading.



RACHEL MARTIN, HOST:

Stocks fell deeper into the red this morning as investors tried to tackle the economic cost of the coronavirus pandemic. Trading was briefly halted within minutes of the opening bell, when the S&P 500 index plunged seven percent. Last night, President Trump announced new measures to try to contain the virus and support the economy.

(SOUND PRESENTATION OF THE ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: After consulting with our senior government health professionals, I have decided to take several strong but necessary steps to protect the health and well-being of all Americans.

MARTIN: But as the Wall Street news today shows, the financial markets were not reassured. We have with us this morning the chief economic correspondent of NPR, Scott Horsley. Hi, Scott.

SCOTT HORSLEY, BYLINE: Hello, Rachel.

MARTIN: We saw another massive sell-off in the first 90 minutes of trading on the stock exchange. What is happening?

HORSLEY: That’s right. Investors were ready to get rid of the shares as soon as the market opened this morning. And very quickly, the S&P 500 index fell 7%. This is the trigger for a 15 minute stop in trading. We saw one earlier this week. And so trading was suspended for 15 minutes. When it rebooted, stocks stabilized a bit. Right now, the S&P is still down about 7%. The Dow Jones Industrial Average – just check my screen – is down around 8% as of this point. So we don’t see the really rapid decline. But remember, it was only yesterday that the Dow Jones entered bearish territory for the first time in 11 years.

MARTIN: That’s right. So the travel industry is obviously going to be affected because of an announcement President Trump made last night – new limits for people traveling to the United States from parts of Europe. The president, in his Oval Office speech, appeared to blame European politics, in part at least, for the coronavirus cases here. Let’s listen.

(SOUND PRESENTATION OF THE ARCHIVED RECORDING)

TRUMP: The European Union has not taken the same precautions and has restricted travel from China and other hot spots. As a result, a large number of new clusters in the United States have been sown by travelers from Europe.

MARTIN: We should just note that there is no evidence to back it up. We don’t clearly understand how many cases here in the United States have been caused by Europeans coming to this country. It should also be noted that there was a lot of confusion about what the president said in general. I mean, he said those restrictions would include the goods – they don’t. He also said that all of Europe would face travel bans – this is not true. Can you explain, however, Scott, the real restrictions and what they might mean for the economy?

HORSLEY: Well, the real restrictions apply to travelers from mainland Europe, so not from the UK. They are banned from the United States for 30 days, but this does not apply to U.S. citizens, immediate family members, or green card holders. It was deployed quite abruptly. There was apparently no warning to the Europeans, and that only added to the confusion, and the White House had to do some cleaning up on this.

This restriction will surely be another blow to airlines, hotels, tourist attractions, which have already suffered during the coronavirus epidemic. European visitors make up about 30% of international travelers to the United States at this time of year, and of course, the industry was already suffering from the loss of visitors from China.

Now, on top of that, for domestic consumers, you have a lot of entertainment, sporting events, large gatherings of all kinds that have been canceled or postponed. Obviously, a highlight, NBA – or lowlight; the NBA announced last night that it was suspending its season. This means less going to bars and restaurants, less spending. It might be a silver lining for Netflix and Amazon, but it is a success for the economy at large. And, you know, the hospitality industry has been a really strong industry, adding tens of thousands of jobs in recent months. It could really change that.

MARTIN: So the White House sketched out this plan to help the economy, but it still doesn’t seem to be helping the stock market. Can you explain what the plan is and why it does not help in this regard?

HORSLEY: Yeah. And that’s a contrast to what happened earlier this week when the market really rallied around the promise of a White House bailout. But when investors actually saw what the president was offering last night, they were clearly disappointed – too little, too late, and too few details. He talks about low-interest loans for affected businesses, perhaps the postponement of next month’s tax deadline – most importantly, perhaps, help for workers who don’t have time off. sick and forced to stay home so they don’t miss a paycheck. But again, we are waiting to see the details of how this might be accomplished.

MARTIN: And we should say that the House Democrats plan to bring their own plan to the floor later today. Scott Horsley, chief economic correspondent for NPR. Thanks, Scott.

HORSLEY You’re welcome.

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