US stock futures plummeted Wednesday evening after President Donald Trump announced that travel from more than two dozen European countries to United States will be suspended for 30 days, an escalation of measures taken to insulate Americans from the novel coronavirus outbreak.
Dow futures plunged more than 1,100 points and were last down 930 points, or 3.94%. S&P 500 futures fell 3.67% and Nasdaq futures were down 3.92%.
The suspension begins Friday at midnight and extends to countries in the Schengen zone, which includes Italy, Germany, France, Spain and 22 other nations. The United Kingdom is not included.
Markets in Asia were all trading sharply lower Thursday morningfollowing Trump’s announcement. Japan’s Nikkei 225 fell 4.5%. The benchmark index is on pace to enter into a bear market, defined as a drop of more than 20% from the most recent high.
Hong Kong’s Hang Seng Index fell 3.8% and is also approaching bear market territory. Australia’s S&P/ASX 200, which entered a bear market on Wednesday, sank 6.15%.
The Shanghai Composite Index fell 1.3% and South Korea’s Kospi Index was down 5%.
Brent crude futures, the global oil benchmark, were down 4.1%, last trading at $34.31 per barrel.
Investors see no endgame in sight and “traders are hammering the sell button now thinking the US government has fallen well behind the curve in its (coronavirus) response,” wroteStephen Innes, a market strategist at AxiCorp, in a note Thursday.
Initial confusion
Trump’s announcement — made during an address to the nation Wednesday night — initially sowed some confusion. He described the suspension as affecting “Europe,” rather than the specific collection of countries that US authorities later clarified.
During the speech he also said that the “prohibitions would not only apply to the tremendous amount of trade and cargo, but various other things as we get approval,” but later corrected himself on Twitter to say that “trade will in no way be affected” by the travel restriction.
“The restriction stops people not goods,” he said.
And US citizens and permanent residents who are in Europe will still be allowed back into the United States during the 30-day period, though will be screened upon entry and face quarantine or restrictions on their movement.
Even so, it remains unclear whether airlines will still fly the routes if passenger demand from European nationals dries up because of the ban.
“Travel restrictions equal slower global economic activity, so if you need any more coxing to sell sell sell sell after a massively negative signal from overnight trading in US markets it just fell in your lap,” Innes wrote.
Disappointed markets
In his speech, Trump spelled out some other areas where he hopes to bolster a flagging economy, including deferring tax payments for some individuals and companies.
He said he would seek to provide “unprecedented” action that would allow sick workers to stay home and still be paid.
And he called on Congress to provide payroll tax relief to Americans, though that idea has been met with some resistance on Capitol Hill.
But Trump didn’t include any concrete measures to buffer the economy, wrote Jeffrey Halley, a market analyst with Oanda, in a research note.
“That has probably disappointed markets more than anything,” Halley added.
The declines followed another volatile day on Wall Street in a roller coaster week for the markets driven by the novel coronavirus outbreak and plummeting oil prices. There are now more than 115,000 cases worldwide. More than 4,000 people have died.
Both the S&P 500 and the Dow slipped into bear market territory, but only the Dow closed the day in a bear market.
Two other key market indexes, the Dow Jones Transportation Average and the small-cap focused Russell 2000, are already in a bear market.
