(BBC) – Share markets in the US plummeted on Wednesday, with losses accelerating after the World Health Organization declared the coronavirus outbreak a pandemic.
The Dow Jones plunged nearly 1,500 points or more than 5.8%, while the S&P 500 fell 4.9% and Nasdaq fell 4.7%.
The declines pushed the Dow more than 20% below its recent high, a threshold that often accompanies a recession.
The falls come as the virus’s spread has the global economy reeling.
Concerns about the disease have disrupted manufacturing, prompted widespread closings and cancellations, and kept people at home.
On Wednesday, UK Chancellor Rishi Sunak unveiled a £30bn package, while the Bank of England delivered an emergency cut in interest rates.
However, the White House and Congress have yet to reach a deal for economic relief after President Donald Trump’s proposal of a tax cut for workers failed to garner widespread support.
Treasury Secretary Steven Mnuchin on Wednesday said that the administration hoped to extend deadlines for tax payments, cover the cost of sick leave for staff forced to stay home and provide loan guarantees for affected industries, such as airlines.
“We are not only focused on the health issues, but the economic issues,” he said.
The New York branch of the US central bank also said it would inject money into the financial system by making more overnight loans available to banks, its second such move this week.
The Fed last week made its first emergency rate cut since the financial crisis in an effort to keep money flowing.
The moves come as the spread of the virus, despite hopes of containment, has rapidly reset expectations for global growth this year.
On Wednesday, economists at IHS Markit said global growth was likely to slow to 1.7% this year, down from the 2.5% it forecast last month.
The firm warned that the outbreak was likely to push Europe, which was already experiencing low growth, into recession and reduce US growth to 1.8%.
“The global spread of the COVID-19 epidemic is the single biggest risk facing the world economy in early 2020,” the firm said.
Earlier, London’s FTSE 100 slid 1.4%, while European indexes saw more modest declines. Those falls follow several weeks of market turmoil.
The 20% decline of the Dow has pushed it into bear market territory, ending a streak of gains that started in 2009.
“It is not the virus itself, but rather the fear and panic related to the virus and the associated altered economic behaviour that could be a damaging tipping point, forcing the global economy onto a darker path,” said Katrina Ell, a senior economist at Moody’s Analytics.
Markets have also been slammed this week by a plunge in oil prices, after oil exporters said they would increase output rather than make coordinated cuts. On Wednesday, oil prices were down more than 3%.
On the Dow, the biggest drag was US planemaker Boeing, which fell more than 18%.
The firm has been in crisis since the crashes of two of its 737 Max planes, which have since been grounded globally for about a year. On Wednesday, it reported 46 cancellations, which were not made up by new orders.
It is also reportedly freezing hiring and being forced to draw on a $13.8bn (£10.7m) loan, in part because of the coronavirus.