By Medha Singh and Sanjana Shivdas
(Reuters) - Wall Street's four-week slump deepened and the Dow Jones Industrials was set to surrender all its "Trump-bump" gains on Wednesday, as the coronavirus pandemic threatened to bring the U.S. economic activity to a grinding halt.
The benchmark S&P 500 index fell 7%, triggering a 15-minute trading cutout, a familiar trend in the last two weeks of wild swings in markets that ended Wall Street's longest ever bull run.
With airports and hotels emptying and airlines asking staff to take unpaid leave to stem losses, the S&P 1500 airlines index <.SPCOMAIR> sank 27.6%, in what could be its worst day on record. Shares in Hilton (N:HLT), Marriott (O:MAR) and Hyatt (N:H) hotels fell by 20% to 30%.
President Donald Trump's request for Congress to approve $500 billion in cash payments to taxpayers along with $50 billion in loans for airlines did little to stem the rout.
Shares in Boeing Co (N:BA), for long a symbol of U.S. tech and industrial power, sank another 24.4% and were now down more than 60% since the start of the year.
"We're going to have massive disruption and dislocation in our economy," said Keith Bliss, managing partner at iQ Capital in New York.
"People are conflating what's going on with the coronavirus with what happened in the global financial crisis."
With Trump activating disaster management agency FEMA across the country, Senate leader Mitch McConnell said lawmakers would vote on coronavirus legislation at 2 p.m. ET.
Wall Street's main indexes had bounced on Tuesday from a massive selloff a day earlier, as the Trump administration pressed for a $1 trillion stimulus package and the Federal Reserve relaunched a plan to buy short-term corporate debt.
But dramatic stimulus measures have only provided short-lived bounces in equities with investors factoring in a global recession and worrying about the duration of the damage extending into the summer.
"There are two things the market is awaiting - a stimulus and it needs to be bigger than a trillion dollars for sure to help all the workers who are going to be out of work for a month or two," said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
"And a little hope in colour on some drug approvals for treatment."
Meanwhile, worries about mass debt defaults or writedowns pressured U.S. lenders, sending the S&P 500 banking subsector <.SPXBK> down 9.5%.
The S&P 500 has fallen by around a third, or around $7 trillion in value, since scaling record highs in mid-February. Its collapse into a bear market, among the fastest in history, has spurred some calls for a pause in trading.
Treasury Secretary Steven Mnuchin late on Tuesday suggested shortening of trading hours at some point, but that drew opposition from several leading investors and exchange managers, who said it would harm the market's credibility.
At 13:38 p.m. ET, the Dow Jones Industrial Average (DJI) was down 1,923.25 points, or 9.06%, at 19,314.13, the S&P 500 (SPX) was down 211.18 points, or 8.35%, at 2,318.01. The Nasdaq Composite (IXIC) was down 561.77 points, or 7.66%, at 6,773.01.
Walmart Inc (N:WMT) rose 3.2% after Credit Suisse (SIX:CSGN) said the retailer would benefit from a structural change in consumer behaviour towards online shopping.
Kroger Co (N:KR) jumped 6.1%, while Costco Wholesale Corp (O:COST) rose 2.3%.
Energy stocks (SPNY) tumbled nearly 13.6% and the led the losses among all 11 S&P sectors as oil prices crashed.
Declining issues outnumbered advancers for a 19.00-to-1 ratio on the NYSE and for a 11.55-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and 271 new lows, while the Nasdaq recorded eight new highs and 934 new lows.