Coronavirus: Dow sinks to worst day since Black Monday as Trump says rebound could be months away

Recession fears grip US as president claims market will 'be very strong' if virus contained

Alex Woodward
New York
Monday 16 March 2020 22:25 GMT
President Trump says: "We're doing really, really well" at Coronavirus press conference

The Dow Jones plummeted 3,000 points on Monday, or 13 per cent, reflecting the market's worst one-day point drop in history amid the coronavirus pandemic that has gripped world economies and eliminated most of the stock gains on which Donald Trump has prided his presidency.

Monday's drop also marked the Dow's worst percentage drop since Black Monday in 1987.

Markets sank while the president was telling reporters that the economy is likely heading into a recession, warning Americans that an economic rebound from the coronavirus pandemic may not arrive until August or later.

Monday's drop came just one day after the Federal Reserve slashed interest rates to near-zero, a dramatic move that appeared to do little to restore confidence in the market, while cities and states across the US announced sweeping closures to avoid spreading the virus.

But Mr Trump claimed that the "market will take care of itself" and will have a "tremendous surge" once the virus is contained.

During a White House briefing, he said: "The market will be very strong as soon as we get rid of the virus."

In a statement on Sunday, the US central bank said that the Covid-19 outbreak "has harmed communities and disrupted economic activity in many countries" as it made a last-ditch effort to boost the economy by increasing its holdings by $700bn and mirroring its quantitative easing efforts in the wake of the 2008 financial crisis.

The president said the move made him "very happy" and that "people in the market should be very thrilled".

But trading on the New York Stock Exchange was halted for 15 minutes after the Dow Jones fell nearly 10 per cent on Monday's opening.

Market analysts have said that the Fed's injection of more than $1trn into the economy and attempts to boost lender confidence are not enough to stem the damage, as businesses prepare to close and the global supply of goods begins to narrow. Meanwhile, lawmakers are pushing for direct financial support to Americans bracing for impact from the looming recession and economic fallout from the virus.

On Sunday, Fed chair Jerome Powell admitted: "We don't have the tools to reach individuals and particularly small businesses and other businesses and people who may be out of work."

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