Jim Bourg/Reuters
- The Dow Jones industrial average on Wednesday plunged below its closing level at President Trump’s inauguration, effectively wiping out all gains made during his presidency.
- It fell to 19,727.33 around 12:30 p.m. ET as Trump’s coronavirus task force delivered an address. That was below the Dow’s close at 19,732.40 on January 19, 2017, the day before Trump’s inauguration.
- The index jumped by 49% from Trump’s inauguration to its February 12 peak.
- Since hitting a record high, the market’s negative reaction to mounting concerns about the coronavirus pandemic pushed stocks into their first bear market in 11 years.
- The White House has moved to stem the outbreak’s economic fallout, calling on people to avoid large groups and announcing plans to send checks to Americans.
- Watch the Dow Jones industrial average update live here.
The Dow Jones industrial average on Wednesday slid below the level seen at President Donald Trump’s inauguration.
It plunged to 19,727.33 around 12:30 p.m. ET as Trump’s coronavirus task force delivered an address. That was below the Dow’s close at 19,732.40 on January 19, 2017, the day before Trump’s inauguration.
Before its swift comeuppance, the benchmark index had soared 49% from Trump’s inauguration to its February 12 peak as Trump slashed regulations, cut corporate taxes, and ushered in a wave of new stock buybacks.
Wall Street cheered as the administration pushed the bull market into a new decade and lifted profits across industries. Roughly one month after the index’s all-time high, the market gains have dried up.
The coronavirus outbreak and its widespread economic fallout kicked off intense bouts of selling in late February after new cases cropped up in South Korea, Italy, and Iran. Stocks fell into correction territory on February 27 as fresh volatility drove back-to-back declines.
The first week of March saw small rebounds wiped out by Friday’s close. By last Thursday, stocks had entered their first bear market in 11 years as compounding coronavirus risks and a new oil-price war dragged prices even lower. The plunge into bearish territory was the fastest ever seen and did away with one of Trump’s most popular and optimistic indicators of economic health.
The government has since issued various forms of economic stimulus to pad the economy and avoid a prolonged downturn. The White House on Monday urged people to maintain social distancing and avoid groups of more than 10 people. Treasury Secretary Steven Mnuchin said on Tuesday afternoon that the administration wanted to send checks to Americans within weeks as much of the population hunkers down at home.
The Federal Reserve has taken up numerous monetary-policy measures to keep lending markets healthy. The coronavirus outbreak and the corresponding calls to self-quarantine have drastically hit consumer activity and US businesses’ revenue streams.
The central bank slashed its benchmark interest rate to near zero on Sunday and initiated the purchase of at least $700 billion in Treasuries and mortgage-backed securities to support credit markets. The Fed’s New York branch has also added trillions of dollars to the financial system through repurchase agreements in recent days, shoring up more cash for liquidity-starved markets.
The central bank announced on Tuesday that it would resurrect a Commercial Paper Funding Facility to further support US businesses hit by the coronavirus outbreak. The facility, made in partnership with the Treasury, will allow the Fed to buy up short-term debt instruments typically used for day-to-day expenses like rent and payroll.
Even as markets turn red for Trump’s time in office, some experts still think his tenure could see gains before the next inauguration. Analysts at Goldman Sachs predicted on Friday that the S&P 500 could fall as low as 2,000 before rallying to 3,200 by the end of 2020. Such a jump would place the 500-stock index within 6% of its February peak and recover most gains made through the Trump presidency.
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