Quotations of casino operator MGM Resorts International fell by more than 30%, shares of product manufacturers are growing
Moscow. March 17. INTERFAX.RU – US stock indices for trading on March 16 fell by 12%. Trading suspended for 15 minutes twice a day: when Standard & Poor’s 500 fell by 7% at the very beginning of the session and then when the drop exceeded 13%, MarketWatch notes.
Out of the 500 companies included in the S&P 500 calculation, 491. shares fell in price. The decrease in quotations of 356 securities exceeded 10%, 189 – 15%, 80 – 20%. The capitalization of the three companies collapsed by more than 30% in a day – they are casino operator MGM Resorts International, oil producer Apache and retailer Capri Holdings Ltd.
Paper prices of food producers, including Conagra Brands (+ 9.8%) and J.M., went up. Smucker & Co. (+ 4.7%).
The CBOE Volatility (VIX) indicator, called Wall Street’s “fear index”, soared to a historic high of about 43% and exceeded 82 points. Even during the financial crisis of 2008, the value of the indicator did not reach only 80 points.
The White House on Monday advised Americans not to visit bars, restaurants, and other crowded places, to postpone all trips, and work from home if possible. Local authorities are recommended to close schools and all crowded places in areas where the spread of the virus. These recommendations will be valid for the next 15 days.
U.S. Coronavirus Cases exceeded 4700, currently known about 93 deaths.
Investors are worried about how the spread of coronavirus can affect the global economy. Even the emergency measures taken by the Federal Reserve System and the Bank of Japan could not dispel these fears.
Weekend Fed lowered the interest rate on federal credit funds at a full percentage point – up to 0-0.25%, and also announced plans for an additional purchase of assets and other measures to provide liquidity to banks. The Fed also said it was ready to use “the full range of tools it has to support the availability of credit for households and businesses.”
Bank of Japan announced building up incentive measures in response to a pandemic. The Japanese Central Bank did not begin to change the key parameters of monetary policy.
The US economy will shrink dramatically in late March and April as consumers and businesses cut spending, according to a Goldman Sachs report. According to the forecast of bank analysts, in the first quarter real GDP will show a zero change, and in the second quarter it will fall by 5%. The increase in the third and fourth quarters is expected in the range of 3-4%. As a result, the assessment of US economic growth following the results of the whole of 2020 was worsened to 0.4% from the previously expected 1.2%.
“Uncertainty regarding these numbers is much higher than usual,” the bank said in a statement. At the same time, Goldman analysts expect strong economic growth in early 2021.
The Financial Services Forum, which brings together the largest US banks, announcedthat its members suspend the repurchase of shares for the remaining period of the first quarter and second quarter of 2020 amid the outbreak of the coronavirus COVID-19.
“The decision to repurchase shares is in line with our common goal of using our capital and liquidity to support citizens, small businesses and the economy as a whole through lending and other important services,” the Financial Services Forum said in a press release. Banks reserve the opportunity to resume the repurchase of shares, “as soon as circumstances permit.”
The organization includes JPMorgan Chase & Co. (Bank shares fell 15% on Monday), Bank of America Corp. (-15.4%), Citigroup Inc. (-19.3%), Wells Fargo & Co. (-14.2%), Goldman Sachs Group Inc. (-12.7%), Morgan Stanley (-15.6%), Bank of New York Mellon Corp. (-14.5%) and State Street Corp. (-18.9%).
Meanwhile, the fall in Empire Manufacturing’s New York manufacturing activity index in March was the all-time high of 34.4 points. As a result, the indicator value dropped to minus 21.5 points, which is the lowest value since March 2009. At the same time, analysts on average expected a decrease of only 4.8 points, according to Econoday. The value of the indicator above the zero mark indicates an improvement in the industrial sector of the region.
The Dow Jones Industrial Average on Monday fell by 2,997.1 points (12.93%) – to 20188.52 points.
Standard & Poor’s 500 per day decreased by 324.89 points (11.98%), amounting to 2386.13 points.
The value of the Nasdaq Composite as a result of trading decreased by 970.28 points (12.32%) to 6904.59 points.