Poof. A huge chunk of stock market gains under Trump are gone

CNN's Alison Kosik speaks to Jake Tapper about the second massive Dow drop this week as a result of coronavirus.

Posted: Mar 13, 2020 10:31 AM
Updated: Mar 13, 2020 10:31 AM

Wall Street's love affair with President Donald Trump is officially over.

The president's prime time speech failed to assuage fears about coronavirus. It did not outline the US strategy to test for and treat it. And two of his major points had to be walked back later.

"Stocks are cratering on the president's remarks from the White House," economist Chris Rupkey of MUFG Union Bank wrote to his clients.

Dow futures slid as many as 700 points when the president announced a 30-day ban on travel from Europe to the United States, including trade and cargo.

An hour later when Trump clarified his scripted speech -- correcting the record that the travel ban was for foreign passengers only, not Americans, and that it didn't include cargo -- the market fell even further.

The view? The travel ban was bad enough. But the clean up showed that the administration still doesn't have a handle on the threat or a plan.

The president "took coronavirus social distancing to the max by saying he was barring entry to the country from citizens from the European continent for thirty days," Rupkey wrote. "Didn't the Great Depression get started by countries putting up trade barriers between themselves and the rest of the world?"

The president also told the nation co-payments for the treatment of coronavirus would be covered by their insurance companies. Except the White House had to walk that back to say insurers were required to cover co-payments for testing only, not treatment. There was only cursory mention of expanding testing (something most Americans are concerned about) and nothing about how prepared hospitals are for surge capacity (something public health officials want to know.)

If the speech was meant to show resolve and leadership and calm markets, it was a swing and a miss.

"The psychology of this got much worse instead of better because of this speech," says David Axelrod, who wrote speeches for President Barack Obama. Axelrod says the blueprint for an oval office address in a crisis is 1) be truthful 2) be open about the scope of the problem 3) clearly outline the plan to address it.

"The president failed on all fronts last night," Axelrod said.

Markets agreed.

Stocks fell deeper into bear market territory at the opening bell Thursday, with the selling so ferocious, it triggered a circuit breaker to pause trading. In just 23 days, the S&P 500 tumbled from record high to down 20% -- something that took 274 days during the 2008 bear market.

On February 19, the S&P 500 was up 49% during Trump's time in office. Now it's up just over 10%.

Investors loved his deregulation and corporate tax cuts. His policies nursed along an aging economic expansion, pulling the Obama recovery into a new decade. But the love affair appears to be over -- as seen in an 8,000 point dive in the Dow in just a few weeks.

Coronavirus is a classic "Black Swan" event: an unforeseen market surprise. Trump has no control over the event itself, only his response to it. How a president handles such events is a test of leadership, teamwork and messaging.

Economist Mohammed el-Erian says a global recession is "very, very likely" and that the US response needs to be more robust.

"It has to come across as a whole-of-government approach. There is a conductor, everybody in the orchestra knows what they're doing, and they're coordinated," says el-Erian, chief economic adviser at Allianz.

"Day one is about stress, things like free testing, covering the uninsured, paid emergency leave, paid medical leave, strengthening unemployment insurance," el-Erian says. "Phase two is about following that up. Once you've built the bridge, the immediate bridge, with well-focused stimulus and infrastructure spending that promotes long-term growth."

"You need a very clear plan," el-Erian adds.

The White House has waived the tax filing deadline for most individuals and deferred taxes for affected businesses. And Congress has passed an $8.3 billion emergency funding package that provides money for testing and funds for community health.

But Congress runs the risk of infuriating investors if a cogent plan doesn't materialize, says Greg Valliere, chief financial strategist for AGF Investments.

"A payroll tax cut looks unlikely...but embarrassed lawmakers may pass a modest bill in the next couple of days that would aid virus victims and help small businesses," Valliere wrote in a note to clients. "Whether a House-Senate conference committee can agree quickly on this bill is unclear, but there's a growing chance of a compromise by tomorrow."

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 75862

Reported Deaths: 3069
CountyConfirmedDeaths
Marion16088730
Lake7688278
Elkhart492685
Allen4002163
St. Joseph357883
Hamilton2829104
Vanderburgh202213
Hendricks1927108
Cass18029
Johnson1789119
Porter135539
Clark128749
Tippecanoe123811
Madison100665
LaPorte93130
Howard91365
Kosciusko86812
Bartholomew81747
Floyd80948
Marshall79323
Monroe76631
Delaware74552
Dubois70812
Vigo69911
Noble68829
Boone68746
Hancock68339
Jackson5965
Warrick58830
Shelby56527
LaGrange56310
Grant52930
Dearborn51228
Morgan49334
Clinton4444
Henry40620
Wayne38510
White37611
Montgomery35921
Lawrence35227
Harrison34823
Decatur34132
Putnam3128
Daviess27720
Miami2772
Scott27210
Jasper2552
Greene25434
Franklin24615
DeKalb2384
Gibson2314
Jennings22712
Steuben2133
Ripley2138
Carroll1962
Fayette1947
Perry18713
Posey1790
Starke1787
Wells1742
Orange17424
Fulton1722
Wabash1703
Jefferson1672
Knox1610
Whitley1556
Tipton14312
Washington1421
Sullivan1381
Spencer1373
Clay1245
Huntington1243
Randolph1244
Newton12010
Adams1092
Owen991
Jay920
Rush854
Pulaski811
Fountain742
Brown741
Blackford652
Ohio656
Benton640
Pike590
Vermillion580
Switzerland530
Parke511
Martin480
Crawford450
Union410
Warren241
Unassigned0206

Ohio Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 102826

Reported Deaths: 3708
CountyConfirmedDeaths
Franklin18697529
Cuyahoga13734505
Hamilton9766257
Lucas5448326
Montgomery443896
Summit3614223
Butler297663
Marion293545
Mahoning2595255
Pickaway239142
Stark1884140
Warren182139
Lorain181377
Columbiana167160
Trumbull1549108
Fairfield141632
Delaware134419
Licking131951
Clark117815
Lake113141
Wood106858
Clermont95311
Medina94535
Miami85839
Tuscarawas79314
Portage77163
Allen76946
Greene71812
Mercer63113
Belmont62326
Richland61412
Erie59728
Ashtabula57646
Geauga55944
Wayne54558
Ross4944
Darke40629
Huron4045
Madison40110
Ottawa39626
Sandusky39017
Hancock3893
Athens3602
Holmes3286
Lawrence3000
Auglaize2636
Union2601
Muskingum2431
Scioto2421
Jefferson2373
Seneca2283
Knox2127
Putnam21117
Shelby2104
Washington20922
Preble2072
Coshocton1967
Champaign1812
Morrow1762
Crawford1755
Hardin17012
Clinton1696
Highland1661
Logan1602
Ashland1543
Fulton1531
Wyandot1509
Defiance1504
Brown1462
Perry1403
Williams1363
Henry1222
Fayette1210
Guernsey1197
Hocking1189
Carroll1135
Monroe9418
Pike790
Jackson760
Van Wert732
Paulding700
Gallia701
Adams612
Meigs540
Vinton322
Morgan300
Harrison261
Noble160
Unassigned00
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