Review & Preview: Oil Down, Dollar Up

By Nicholas Jasinski |  Wednesday, March 18

Downside. Stocks got a big lift in the last half-hour of trading today, as the Senate secured enough votes to pass a meaningful coronavirus-relief bill.

"This bill responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers," reads the legislation, which was earlier approved by the House.

Next up for lawmakers is a potentially trillion-dollar fiscal stimulus bill meant to blunt the impact of the economically disruptive measures required to slow the spread of Covid-19, the respiratory disease caused by the novel coronavirus. Tax deferrals, cash payments to individuals, and bailouts for hard-hit industries are all reportedly under discussion in Washington.

U.S. indexes rose well off their lows of the day, but nonetheless closed with hefty losses. The S&P 500 had dropped to a 7% loss on the day shortly before 1 p.m., triggering an automatic 15-minute trading halt for the fourth time since last Monday. Investors fretted over the looming economic damage of social distancing measures in countries across the globe.

The selloff deepened after trading resumed—before the late-afternoon recovery boosted the S&P 500 to down 5.2% at the close. The index has now had eight straight daily moves of at least 4%. This is not a market for the faint of heart.

The Dow Jones Industrial Average tumbled 1,339 points, or 6.3%, to close below 20,000 points for the first time since January 2017. The Nasdaq Composite lost 4.7%. Each index had been off 9% or more earlier in the day.

The dash for cash continued today, with both risky and safe-haven assets selling off in unison. Bonds usually rise when stocks fall, but that relationship has broken down on several days over the past week. Some investors appear to be simply selling whatever assets they can get rid of.

As U.S. Treasury bonds fell today, their yields rose: The 10-year Treasury note yield ticked up 27 basis points, or hundredths of a percentage point, to 1.266% today—its highest level in three weeks.

Meanwhile the U.S. Dollar Index, which measures the price of the currency against a basket of other currencies, rose 1.3% to within a spitting distance of its record high. Where better to be at times like these than in cold, hard cash? Alexandra Scaggs has more on that at barrons.com.

And in what's perhaps a telling sign of the times, the New York Stock Exchange said today that it plans to temporarily close its iconic trading floor starting on Monday, because of concerns about Covid-19. The vast majority of trading already happens electronically, but it is a potent symbol nonetheless.