Stocks listed on American exchanges today fell sharply, erasing their Tuesday rebound and adding to their Monday declines.
On a day that saw the World Health Organization declare that the spread of COVID-19 has officially become a pandemic, with 4,000 deaths reported from the illness so far, stock markets seemed more affected by the prolonged human and economic toll the virus could take than any stimulus package that could potentially offset its costs.
For the first time in over a decade, bears overran Wall Street with the Dow down more than 20%.
The Dow Jones Industrial Average (DJIA), S&P 500 and Nasdaq composite fell 5.6%, 4.9% and 4.7% during the day, respectively. After the day’s declines, the DJIA was off 20.4% from recent highs, while the S&P is off a more modest 19.2%. The Nasdaq is off a similar 19.2%, just missing bear territory. (Previously SaaS stocks entered a bear market after setting records earlier in the year.)
While the Nasdaq is not down as far as the DJIA or S&P 500, some technology stocks suffered sharper declines than the broader market or their larger corporate category. Companies like Uber and Lyft, both recent IPOs that leveraged technology solutions and venture capital to grow, fell 9.4% and 11.8%, respectively. Those declines pushed their equity even further under their IPO prices, undercutting their Q4 narrative of rising chances of profitability ahead of expectations; those wins now feel distant.
Travel hit hard
The ride-hailing companies saw shares fall as the market reacted to their vulnerability to the coronavirus. In an effort to get ahead of the spreading virus, Uber announced Wednesday that it may suspend accounts of drivers and passengers who have been exposed to or contract COVID-19. The company also has said it will work to provide drivers with disinfectants to help keep their vehicles clean.
Those efforts weren’t enough to keep shares out of the red. Uber and Lyft are dependent on drivers and passengers to use the ride-hailing app, as well as their other shared products, like scooters and e-bikes.
Travel-related stocks also got pummeled today, notably Boeing, which announced in a monthly update that companies were canceling the 737 MAX aircraft. Boeing shares fell more than 18% to around $189 after the company reported it had more cancellations than orders in February.
Volatility as the new normal
In recent weeks, the global stock market has shaken, boosting volatility both at home and abroad. Quickly it’s become normal for the DJIA to shift by 1,000 points in a day, and to see huge losses met with next-day gains. This could be read as the market repricing as new information is digested. A less charitable read is that investors are simply unsure of what companies are worth in the face of an uncertain economic future.
The volatility, however, has likely slowed the IPO market, a key liquidity source for private investors and technology companies. A number of private companies that were hoping to make their market debut are likely rethinking their plans, given the state of markets and there’s no indication of when things may stabilize.
For now, the new normal has much of the global economy seeing red.
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