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Stock Market News for Mar 19, 2020

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U.S. stocks closed sharply lower on Wednesday reversing gains of the previous and ended at yet another new low. Serious concerns about a global economic downturn and growing spread of the coronavirus across the world completed dented investors’ confidence. All three major stock index finished in the red.

The Dow Jones Industrial Average (DJI) plunged 6.3% or 1,338.40 points to close at 19,989.92. The S&P 500 plummeted 5.2% or 131.09 points to close at 2,398.10. Meanwhile, the Nasdaq Composite Index closed at 6,989.84, tumbling 4.7% or 344.94 points. A total of 18.51 billion shares were traded Wednesday, higher than the last 20-session average of 14.6 billion. The CBOE VIX increased 0.7% to close at 76.45. Decliners outnumbered advancers on the NYSE 12.71-to-1 ratio. On Nasdaq, 8.97-to-1 ratio favored declining issues.  

How Did The Benchmarks Perform?

The Dow closed in negative territory with 25 components of the total 30 components of the blue-chip index closed in the red while 5 finished in green. Notably, during the intraday trading, the blue-chip index fell below 19,732.40, the closing level of Jan 19, 2017, when President Donald Trump took charge.

The benchmark S&P 500 ended in the green with each of its 11 sectors posted gains. The Energy Select Sector SPDR (XLE) plunged 14.4%. Yesterday’s closing level was the broad-market index’s lowest since December 2018.

Meanwhile, the tech-laden Nasdaq Composite finished in the red driven by price depreciation of large-cap stocks. United Airlines Holdings Inc. (UAL - Free Report) was the major loser of Nasdaq Composite as stock price plummeted 30.3%. United Airlines a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here

Massive Stimulus Packages

The European Central Banks has announced to purchase $820 billion of government and private sector bonds as well as commercial paper by year end. This measure will keep borrowing costs down to support the outlook for Europe’s economy and will ensure the central bank’s low benchmark rates will pass to businesses and consumers.

Meanwhile, President Donald Trump has signed a $100 billion coronavirus aid package.  The new stimulus includes provisions for emergency paid leave for workers as well as free testing.On Mar 17, President Trump sought the approval of the Congress for a massive fiscal stimulus worth anywhere from $850 billion to more than $1 trillion to counter the coronavirus effect on the economy.

Of this package, $500 to $550 billion is likely to be utilized in direct payments or tax cuts. Small business assistance will be around $200 to $300 billion. Airline industry is likely to get $50 to $100 billion.

Moreover, The U.K. government has announced new financial measures worth £330 billion ($398 billion) of government-backed loans and guarantees, which the businesses can avail if they need cash for operation.

Economic Data

The Department of Commerce reported that Housing starts declined 1.5% in February to a seasonally adjusted annual rate of 1.599 million units. However, the data surpassed the consensus estimate of 1.505 million units. January’s data was revised upward to 1.624 million units instead of dropping to 1.567 million units as previously reported.

Building permit tumbled 5.5% in February to a seasonally adjusted annual rate of 1.464 million units. However, the data surpassed the consensus estimate of 1.442 million units. January’s data was revised downward to 1.550 million units instead 1.551 million units as previously reported.

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