Wall Street Endures Another Wicked Day of Losses; Oil At Multi-Decade Lows; Gold, Silver Decoupling

There is nothing good that can be said about market action on Wednesday, March 17, except that it could have, and probably should have, been worse. A late-session rally brought all US indices off their lows of the day, to finish with spectacular, though not record, losses.

The Dow Industrials were down by as much as 2,320 points, the NASDAQ had fallen 648 points, and the S&P had fallen by 249 points before the late-day surge. The losses were spread across almost all sectors and stocks, some retail operations, grocery chains, and consumer favorites, such as Dow components, Wal-Mart (WMT) and Walgreens (WBA), enjoyed gains of 2.78% and 6.47%, respectively.

Oil was beaten to multi-decade lows, with WTI crude falling to $20 per barrel and Brent hitting the $25 mark.

Most of the financial carnage was caused by effects of the COVID-19 pandemic and efforts by governments and medical professionals around the world to control its spread. Worldwide, the virus has infected more than 220,000 and caused over 9,000 lives. In the United States, the numbers are growing rapidly with widespread testing becoming available. Cases are up to nearly 10,000 and 150 deaths have been attributed to the disease.

Where Wall Street and international markets go from here is plain for all to see. With financial assets having been boosted relentlessly after the Great Financial Crisis (GFC) of 2008-09, stocks are being sold off as though they had little to no value, which may, in fact, be the correct assumption.

With many companies and cities shut down indefinitely, people are more concerned about their personal health and welfare than what's in their 401k or retirement accounts. Financial stocks and airlines have thus far led the cascading declines, but they are being joined by stocks of all stripes.

Overnight, the Senate approved a bill sent by the House of Representatives and ready to be signed into law by President Trump for over $100 billion in relief to various segments of the country. The bill includes provisions for free coronavirus testing, paid sick leave and emergency leave for some individuals, food relief and enhanced unemployment benefits, which are probably going to be needed with an expected spike in new claims.

The European Central Bank approved a 715 euro stimulus package aimed primarily at bond repurchases and other assorted financial plumbing.

At 8:30 am ET, the US Labor Department updated the most recent new claims for unemployment insurance of 281,000, an increase of 70,000 from the previous week, though that number is for the week ending March 14. Claims are expected to surge to over 500,000 next week and some estimates are projecting job losses of more than three million by July, a number that is likely to be seen as conservative.

Gold and silver continue to be sold off as holders of paper contracts sell to make margin calls. The paper prices of the metals feel again on Wednesday, leaving gold at $1474.40 and silver closing n New York at $11.89.

Physical precious metal prices have broken away from the futures, with dealers charging extensive premiums as demand has skyrocketed. Silver is selling for $17 to $20 and more per ounce, with some dealers imposing 100% premiums. Prices on eBay for single ounce purchases of silver are ranging from $18 to $24 and higher.

Gold, partly because its high price holds down demand, is being sold in a range of $1580-$1675 per ounce with widespread shortages at online dealers. While the premiums for gold are still in the 10% range, they are significantly higher than just a few weeks ago. One would expect the gold price to be rising amid the buying surge, and decoupling from the paper price of the metals - which has already occurred with silver - may be imminent.

Bonds were sold at the long end of the treasury yield curve, sending the 30-year bond to 1.77% yield and the 10-year note to a yield of 1.18%, while the shortest durations, 1, 2, 3, and 6-month bills were hot tickets, ending the day with yields of 0.04, 0.03, 0.02, and 0.08%, respectively.

As Wall street steadies for another day of wicked trading, European markets are marginally lower. Asian markets felt even more pain in early Thursday trading. Indonesia's Jakarta Composite Index was down 5.20%; South Korea's KOSPI Composite was off 8.39%; the Straits Times Index off 4.73; Japan's NIKKEI fell by a mere 1.04%, and the Hang Seng, Hong Hong's index, was down 2.61%.

At the Close, Wednesday, March 18, 2020:
Dow Jones Industrial Average: 19,898.92, -1,338.46 (-6.30%)
NASDAQ: 6,989.84, -344.94 (-4.70%)
S&P 500: 2,398.10, -131.09 (-5.18%)
NYSE: 9,384.60, -678.76 (-6.74%)