Australia markets closed

US stocks open lower, erasing recent gains and plunging shares deeper into bear territory

Alex Wilhelm and Jonathan Shieber
Image via Getty Images / Somyot Techapuwapat / EyeEm

The rollercoaster ride of equity markets continues as all of the major stock indexes opened sharply lower one day after President Donald Trump announced the intention to push through a sweeping aid package -- including the potential for a direct payout to most American workers.

Domestic indexes had risen sharply on Tuesday, but market volatility increasingly seems to be the new normal according to market analysts at some of the nation's biggest financial services firms. "The Covid-19 pandemic sparked the fastest reassessment of equity market fundamentals and risk in the last 30 years," Bram Kaplan, executive director of equity derivates strategy at JPMorgan, told clients in a note quoted by CNN.

On a net basis, the market is heading south. Worth just a handful of points over the 20,000 mark, the Dow Jones Industrial Average (DJIA) is nearly 10,000 points closer to its 52-week low than to its 52-week high, for example. More exotic indices have also seen their value decline. A popular basket of SaaS and cloud stocks, for example, is off more than 30% from recent highs, including a 4.2% decline today.

Here's the day's damage, so far as trading resumes:

  • DJIA: dropped 1,162.44, or 5.47%, to 20.074.94
  • S&P 500: fell 126.55, or 5%, to 2,402.64
  • Nasdaq Composite: slid 306.74, or 4.18%, to 7,028.05

The declines, however, are not spread equally. Companies like Uber, Lyft, CrowdStrike and Slack have taken extra large lumps in recent weeks. It appears that the optimism that drove their value as private, and later newly public companies, has fallen away.

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And companies that lose money, no matter their growth rate, shine less brightly when negative emotion outweighs its sunnier sibling.

Still, as the markets follow the gyrations of a news cycle driven by the U.S. response to the COVID-19 pandemic, which has now infected more than 6,500 people in the U.S., volatility is going to be the new normal.