Stocks Open Moderately Lower, A Break From Recent Swings

NEW YORK (AP) — Stocks are opening lower on Wall Street Thursday but with far less dramatic moves than the market has seen in recent days.

The Dow industrials are down about 400 points, or 2%. The market been whipsawed this month over worries that the coronavirus has already tipped the global economy into a recession. The relative calm came after the Federal Reserve set up an emergency lending facility to help unclog money markets, the third program it has revived from the financial crisis of 2008. The New York Stock Exchange is temporarily closing its trading floor and moving to all-electronic trading beginning Monday after two employees tested positive for coronavirus.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:

Stock markets were largely subdued Thursday after days of massive volatility, as investors digested new financial support measures, including the European Central Bank’s promise to funnel 750 billion euros ($817 billion) into financial markets.

Market sentiment appeared fragile as investors rushed to convert holdings to cash, bracing for a prolonged coronavirus-induced recession.

After opening higher, European stocks were trading lower, with Germany’s DAX shedding 0.7% to 8,386.11. The CAC 40 in Paris fell 0.4% to 3,738.37. Britain’s FTSE 100 fell 1.5% to 5,006.56.

The futures for the Dow were down 1.5% and those for the S&P 500 were 1.4% lower.

Signs that the outbreak’s impact will be far reaching and prolonged have undermined efforts to staunch the bloodletting on the markets.

Even prices for investments seen as very safe, like longer-term U.S. Treasurys, have been slumping as investors rush to raise cash.

Australia’s S&P ASX/200 declined 3.4% to 4,782.90 after the central bank announced it was cutting its policy rate by 0.25 percentage point to a record low 0.25%, among other measures.

“It’s amazing how desensitized we’ve become to central banks’ dropping huge numbers and massive amounts of cash in the markets’ laps,” Stephen Innes of AxiCorp said in a commentary.

Japan’s Nikkei 225 index gave up 1.0% to 16,552,83, while in South Korea, the Kospi sank 7.5% to 1,471.61. Hong Kong’s Hang Seng index slipped 2.6% to 21,709.40, and the Shanghai Composite index shed 0.9% to 2,704.89.

India’s Sensex sank 2.7% and Taiwan’s benchmark fell 5.8%. Shares in Southeast Asia also fell.

The losses followed a more than 1,300 point, or 6.3%, decline Wednesday in the Dow Jones Industrial Average, which has now given up nearly all of its gains since President Trump was elected in 2016.

The New York Stock Exchange said late Wednesday it will temporarily close its iconic trading floor in lower Manhattan and move to all-electronic trading beginning Monday as a precautionary step amid the coronavirus outbreak.

The price of oil fell 24% on Wednesday, dropping below $21 per barrel for the first time since 2002. On Thursday, U.S. benchmark crude climbed 11.3%, or $2.30, at $22.67 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, picked up $1.19 to $26.07 per barrel.

As big swaths of the economy retrench while much of society comes to a halt in an attempt to slow the spread of the virus, investors have been clamoring for help from central banks and other authorities around the world to support the economy until it can begin to reopen.

They got a big shot of that Tuesday, when the Trump administration briefed lawmakers on a program that could surpass $1 trillion and the Fed announced its latest moves to support markets.

On Wednesday, President Donald Trump signed an aid package, approved earlier Wednesday by the Senate, to guarantee sick leave to workers who fall ill. Trump’s authority under the 70-year-old Defense Production Act gives the government more power to steer production by private companies and try to overcome shortages in masks, ventilators and other supplies.

Late on Wednesday, the Federal Reseve said it will establish an emergency lending facility to help unclog a short-term credit market that has been disrupted by the viral outbreak. Around the same time, the European Central Bank launched a new, expanded program to buy financial assets in a bid to calm markets. The 750 billion euros in purchases are aimed at keeping borrowing costs down and making sure the bank’s low rates get through to the economy.

For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough, and those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems, and recovery could take six weeks in such cases.

Investors are struggling with uncertainty about how badly the economy is getting hit, how much profit companies will make and how many companies may go into bankruptcy due to a cash crunch.

Even prices for longer-term U.S. Treasurys, which are seen as some of the safest possible investments, fell as investors sold what they could to raise cash. That pushed the yield on the 10-year Treasury higher, to 1.13%. It had recently dropped below 1% for the first time ever.

The mayhem is creating a “cash crunch,” that is putting pressure on financial institutions, said Jackson Wong of Amber Hill Capital in Hong Kong.

“That’s why the financial markets are performing so badly,” Wong said.

The turmoil is also rocking foreign exchange markets.

“Simply put, it’s a liquidity mismatch as there are far more U.S. dollars in demand than currently on offer,” Innes said.

The dollar was at 109.71 Japanese yen, up from 108.07 yen late Wednesday. The euro fell to $1.0752 from $1.0913.