Stocks Plunge as Trump’s Travel Ban Adds to Distress: Live Updates

Stocks plunge, with S&P 500 destined for bear market.

Stocks plunged on Thursday, as President Trump’s latest effort to address the coronavirus outbreak — a ban on the entry of most Europeans to the United States — failed to address investors’ concerns about the global economy.

Trading in the United States was halted just minutes after the open when a 7 percent drop in the S&P 500 triggered a so-called circuit breaker. The halt, for 15 minutes, is intended to prevent markets from crashing.

The benchmark remained down about 7 percent after trading resumed. Trading will be halted for a second time if the drop reaches 13 percent. The travel ban hit shares in Europe particularly hard, with major benchmarks there down more than 9 percent.

The waves of selling this week have left the Dow Jones industrial average and several major global benchmarks in bear market territory — a term that signifies stocks have fallen more than 20 percent from their highs. Without a substantial recovery on Thursday, the S&P 500 will end there as well.

The declines follow a spate of late news from the United States on Wednesday. President Trump announced that the United States would stop most Europeans outside Britain from traveling to the country for 30 days in an effort to slow the spread of the virus. The State Department advised Americans to reconsider all international travel. The National Basketball Association suspended its season after a player tested positive.

With global growth on the line, investors have been looking for world leaders to step in to keep the economic gears turning. Mr. Trump on Wednesday said he would extend financial relief for sick workers and would ask Congress for more. Britain has said it would spend more than $30 billion. Central banks are cutting interest rates, or taking steps to keep them suppressed.

So far, for investors, it hasn’t been enough.

“The past few days has found the market waiting for decisive and intelligent action on fiscal policy front,” said Carl Tannenbaum, chief economist at Northern Trust. “Until there are details on the steps that leadership intends to pursue to remedy the economic effects of the viral outbreak, equity markets will be vulnerable.”

On Thursday, news of the latest travel ban battered airline stocks. Cruise operators were also sharply lower, and, with oil prices falling more than 5 percent, energy companies were among the day’s worst performers.

Travel stocks are getting clobbered … again.

News of the latest travel ban imposed by the United States hammered shares of the three big American carriers that fly trans-Atlantic routes: United Airlines, Delta Air Lines and American Airlines all fell more than 10 percent Thursday morning.

Already reeling from a steep decline in bookings because of the coronavirus outbreak, the airlines could lose millions of dollars in revenue from the U.S. ban on most passenger travel from continental Europe, announced by President Trump on Wednesday night. Trans-Atlantic flights account for a big chunk of the carriers’ international business.

Carnival Corp. also plunged after its Princess Cruises unit said it would suspend all cruises for the next two months. Royal Caribbean Cruises and Norwegian Cruise Line were also down more than 20 percent.

One of the first major coronavirus outbreaks took place on a Princess ship off the coast of Japan, the Diamond Princess. Eight people died and more than 700 were infected. And more than 20 people linked to a second Princess cruise ship in California, the Grand Princess, have also tested positive for the virus.

Also down sharply on Thursday was Expedia, the travel booking site, which fell 14 percent. Wynn Resorts fell about 12 percent.

Trading in the United States was temporarily halted. Here’s why.

About 6 minutes into the trading day in the United States on Thursday, the S&P 500 plunged 7 percent, setting off an automatic 15-minute trading halt known as a circuit breaker. Additional breakers would have been tripped at 13 percent and 20 percent.

Circuit breakers were introduced after the October 1987 Black Monday stock market crash as a way to provide time for reflection by temporarily halting the action on hectic days. The circuit breakers were revamped after the May 6, 2010, collapse in stocks that came to be known as the Flash Crash. The current circuit breakers, which were established in 2013, were set off for the first time ever on Monday.

Wall Street’s plumbing is starting to freeze up.

Conditions in bond markets have been growing dicier all week. On Wednesday afternoon, investors across Wall Street reported that Treasury bills and bonds were becoming hard to trade.

Yields swung wildly. There were few sellers and buyers for older bonds, and a huge gap between what they were asking for and offering. And while it was difficult to point to the root cause of the sudden lack of liquidity — the ability to buy and sell securities at a reasonable value — calls for help were widespread.

“Liquidity conditions in the Treasury market look troublingly poor,” economists at Evercore ISI wrote in a research note. “We think the Fed needs to act now.”

The central bank did step in on Wednesday afternoon, boosting the size of the temporary loans it has been making to eligible banks and adding ones that extend over a longer period of time. Those changes to the repurchase, or repo, operations were an attempt to keep money markets calm, the second time this week officials had ramped up their offerings.

But many investors are looking for an even more aggressive response as economic fears stemming from the coronavirus send a jolt through global markets.

The European Central Bank said Thursday it would step up its purchases of government and corporate bonds to hold down market interest rates, while expanding lending to commercial banks at very favorable terms as it tries to prevent the coronavirus from crippling the already vulnerable eurozone economy.

But the bank disappointed expectations that it would cut a key interest rate.

The E.C.B. said it would buy an additional 120 billion euros, or $135 billion, of government and corporate bonds it buys every month as part of an effort to increase demand, drive down market interest rates and make the cost of borrowing cheaper. Currently, the central bank is buying bonds at a rate of 20 billion euros a month.

This is the chief finding from a report released by the Organization for Economic Cooperation and Development on Thursday morning — a potential indication that the deadly coronavirus risks turning what was already flagging growth into a global recession.

Members of the so-called Group of 20 countries — a bloc that collectively accounts for roughly 90 percent of the world’s economic output — saw their growth slow to 0.6 percent during the last three months of 2019, down from 0.8 percent during the previous quarter, according to the report. Japan, Italy, France and Mexico all contracted.

The trend was especially pronounced in Britain, where growth slowed from 0.5 percent between July and September to zero during the last three months of the year. Growth remained unchanged in the United States, remaining at a pace of 0.5 percent expansion.

Here’s what else is happening.

• The actor Tom Hanks said he and his wife, Rita Wilson, had tested positive for the coronavirus. The 63-year-old Academy Award-winning actor is in Australia, where he was set to film a movie about the life of Elvis Presley.

• Australian stocks plunged more than 7 percent on Thursday, the worst drop since the 2008 financial crisis, as the government’s unveiling of a multibillion-dollar stimulus package did little to ease investors’ worries.

• The rate on a 30-year fixed-rate mortgage has dropped to about 3.74 percent, and the Mortgage Bankers Association said Wednesday that refinancing applications jumped 79 percent last week.

• Two California companies, CrowdStrike and FireEye, and the Israeli company Check Point confirmed this week that the Chinese groups were sending out coronavirus-themed documents loaded with malware. For now, the breaches have focused on targets in Vietnam, Mongolia and the Philippines.

Reporting was contributed by Jack Ewing, Peter S. Goodman, Liz Alderman, Alexandra Stevenson, Isabella Kwai, Keith Bradsher, Nicole Perlroth, Matthew Goldstein, Geneva Abdul and Carlos Tejada.