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Dow dives more than 2,300 points after stock trading halted

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Posted at 2:35 PM, Mar 12, 2020
and last updated 2020-03-12 16:35:17-04

Stocks suffered a second straight day of punishing losses, briefly shutting down markets amid growing concerns about the economic impact of the coronavirus.

Trading was stopped minutes after markets opened on Thursday when an 8% drop in the S&P 500 temporarily halted activity. The index has three "circuit breakers" that kick in when stocks decline by 7%, 13% or 20% in a single trading session. It's the second trading halt this week, following a rout on Monday.

Although stocks were briefly lifted when the Federal Reserve Bank of New York moved to provide more short-term funding to lenders, markets quickly thudded lower. The Dow closed down 2,352 points, or 10%, at 21,200. The S&P 500 and tech-heavy Nasdaq both fell more than 9%.

Both the Dow and S&P 500 are now in a "bear" market, meaning both indexes have fallen more than 20% below their peak last month. That has brought the record-long bull run that started in 2009 after the Great Recession to a screeching halt.

The plunge also shows that investors weren't reassured by President Donald Trump's pledge in a Wednesday night speech to offer help to businesses and consumers, according to Oxford Economics chief U.S. economist Gregory Daco.

"Markets reacted negatively to what was perceived as a solemn but confused speech that placed blame on other nations, omitted to focus on immediate actions to relieve the most affected individuals, and lacked in concrete fiscal and health measures to address the economic and financial impact of the virus," he told investors in a research note.

The ban on travel from Europe to the U.S. for the next 30 days will deliver a "massive hit" to the travel and tourism industries in the U.S., Daco said. About 10 million visitors come from Europe to visit the U.S. each month.

Travel stocks fell sharply on Thursday, with American Airlines tumbling 13% and Delta shedding 12%. Hotel chain Marriott declined 9.5%, while travel-booking site Expedia lost 15.7%.

Tax filing delayMr. Trump's fiscal approach to blunting the impact of the coronavirus is also raising questions on Wall Street. Part of his plan is a recommendation that the Treasury delay the April 15 tax filing deadline, which would provide relief to taxpayers who owe the IRS.

A tax deadline delay may not help the workers who most need relief, given that taxpayers who typically owe the IRS are higher-income households, Daco pointed out. About 80% of taxes owed to the IRS stem from workers who earn more than $100,000 per year, while 50% are owed by people who earn more than $250,000.

There's also concern that a delay in the April 15 tax deadline could result in a delay in tax refunds, which many low- and middle-income taxpayers count on, according to Height Securities.

"There is a concern among tax policy experts we have spoken with that a delay in tax filings could also delay the issuance of tax refund checks, which represent a significant source of income for many Americans," Height Securities noted.

"Financial markets were disappointed by the absence of concrete measures targeted at the most affected populations including paid sick leave, enhanced unemployment insurance, free coronavirus testing, enhanced supplemental assistance programs, and support for health care workers," he noted.

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