“So, first of all, let me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance”. —First inauguration of Franklin D. Roosevelt
Above is FDR's speech during his first inauguration, and it applies today as much as it does today.
Like Henny Penny screaming that the “sky is falling”, people are way ahead of the virus. That is how markets work, and yesterday was the best example in a long time of how fear feeds on itself.
Wednesday we had 58 confirmed cases. Yesterday, the number may have been as high as 69. There have been no deaths in America yet.
The SPX opened at roughly 3050, which was about 66 points lower. All of this was attributed to Saudi Arabia suspending pilgrimages to Holy Sites, the CDC stating that it fears a “community outbreak” in Sonoma Country after finding its first case. In addition, China and Japan announce they were closing schools.
After the open, the SPX fell and got as low as 3007 (-109 pts), a significant technical number. This happened in the first hour, but then the sun came out to sterilize the markets. A miracle happened.
There was no negative news about the virus for 3 hours and VP Pence spoke to reassure the public. The SPX worked its way back to -19.32 (minis down about -15) by the start of the 3rd hour.
11:30am Central to Close
When the markets reached their zenith for the day, some reporters on CNBC were predicting that the markets would be in the GREEN by the close. This was short lived when the Governor of California stated that there are 8,400 people from commercial flights being monitored for CoV-19. He stated that California has 28 confirmed cases of the 2019-nCoV.
This was enough to kill all forward movement, and gravity set back in. The rest of the day was a slow fall back to the lows.
On the close, the SPX broke through support of 3,000 like it didn't even exist. Once through 3,000, algos and traders panicked. In the final moments, the SPX fell another 22 points to close at 2978, but futures kept falling for another -15 minutes.
LOOK at the devastation since last week: