Traders work on the floor of the New York Stock Exchange, January 27, 2020.
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9:11 am: Goldman Sachs says bull market to end “soon,” sees another 15% fall in market
Goldman Sachs’s top U.S. stock strategist warned clients on Wednesday that the longest bull market in American history will end “soon” and that the market could see another 15% drop from here. David Kostin slashed his mid-year S&P 500 forecast to 2,450, meaning the investment bank now sees the market falling another 15% beyond Tuesday’s close to levels not seen since December 2018.
“After 11 years, 13% annualized earnings growth and 16% annualized trough-to-peak appreciation, we believe the S&P 500 bull market will soon end,” Kostin warned. “Both the real economy and the financial economy are exhibiting acute signs of stress.” — Franck
8:54 am: Dow’s roller-coaster ride
In the last nine trading sessions, the Dow has posted a gain or loss of more than 1,000 points on five occasions. – Stevens
8:44 am: Oil slides more than 3%, on pace for its worst week since the financial crisis
Oil prices slid more than 3% on Wednesday as Saudi Aramco said it had been instructed to increase its production to a record 13 million barrels per day. The move comes as tensions between Saudi Arabia and Russia have escalated after last week’s OPEC talks in Vienna ended with no agreement between the 14-member cartel and its allies. U.S. West Texas Intermediate crude and international benchmark Brent crude both plunged 24% on Monday, posting their worst day since the Gulf War in 1991. On Tuesday, WTI jumped 10% as Russia indicated that additional talks were not off the table, although it appears that move may have been short lived. WTI is currently trading 3.8%, or $1.33, lower at $33.05, while Brent is trading at $35.75. For the week, US crude is down more than 19%, putting it on pace for its steepest weekly loss since the financial crisis. – Stevens
8:30 am: Here’s where things stand one hour before the open
Losses are accelerating and U.S. stock futures are pointing to steeper declines at the open. The Dow is now set to drop more than 800 points, for a loss of 3.2%. The S&P 500 and Nasdaq are poised to open 3.3% and 3% lower, respectively. – Stevens
8:26 am: Don’t bet that fiscal stimulus isn’t coming, says Evercore ISI
Despite the uncertainty about fiscal stimulus weighing on the market on Wednesday, Evercore ISI believes it wouldn’t be wise to bet that nothing is coming. “The non-announcement on fiscal policy yesterday was disappointing and this process will be volatile, but it’s important not to lose focus of the bottom line,” writes Dennis DeBusschere of Evercore ISI. “Policymakers have clearly shifted into fiscal stimulus mode and are discussing programs to transfer money from the public to the private sector. Neither party is going to tighten the purse strings and refuse stimulus, targeted or otherwise, as the economy continues to shut down.” – Melloy
8:22 am: No Biden relief rally this time
Former vice president Joe Biden is projected to win the Michigan, Mississippi, Missouri and Idaho primaries, NBC News said Tuesday night. Biden is gaining momentum and putting distance between himself and Vermont senator Bernie Sanders for the Democratic party’s nomination. But stocks aren’t responding to Biden’s victories in the same way they did after Super Tuesday. The Dow Jones Industrial Average is slated to open down nearly 800 points on Wednesday. Wall Street firms consider Biden as safer for the market than democratic-socialist Bernie Sanders. – Fitzgerald
8:16 am: Fiscal boost to combat coronavirus slowdown not a sure thing, Raymond James says
Raymond James analyst Ed Mills noted bets on a fiscal response to fend off an economic downturn due to the coronavirus may be premature. “On the positive side, it does appear that President Trump has pivoted quickly towards supporting a bazooka-level fiscal stimulus package,” he said in a note. “More concerning is the lack of any congressional consensus (and skepticism) on what any fiscal package should look like and the fact that Congress will be in recess next week, pushing any deal to the week of March 23, at the earliest.” — Imbert
8:13 am: Fed expected to go to crisis-era interest rates by April
The Federal Reserve is likely to take short-term interest rates to near-zero by April, according to market pricing Wednesday morning. By next week’s Federal Open Market Committee meeting, the fed funds rate, which sets the cost of overnight borrowing and is used as a benchmark for a host of consumer interest rates, is expected to fall 75 basis points to a target range of 0.25%-0.5%, according to the CME’s Fed Watch tool. Traders expect the Fed to lop off the remaining quarter-point by April, putting the funds rate where it was from 2008-15, during and after the financial crisis. Market pricing implies the funds rate to trade at 0.12% by the end of 2020; it is currently targeted in a range of 1%-1.25% and most recently traded at 1.09%. – Cox
8:09 am: Bank of America cuts Apple price target
Apple shares fell more than 2% in the premarket after Bank of America Securities analyst Wamsi Mohan cut his price target on the tech giant to $320 per share from $350 per share. Mohan expects Apple’s supply chain to be constrained until April or May. “We now expect a more negative impact to global demand, as Covid-19 has spread well beyond China,” he said. — Imbert, Bloom
8:06 am: Coronavirus update: U.S. cases exceed 1,000
As of Wednesday morning, at least 113,851 coronavirus cases have been confirmed globally. In the U.S. alone, there have been more than 1,000 cases of the infection. New York state has more than 170 confirmed cases, the second most in the U.S. behind Washington state. New York City mayor Bill de Blasio said new cases of the coronavirus in the city were “coming in so intensely.” He said almost 2,000 New York City residents were in voluntary isolation while 30 people were in mandatory quarantine. – Li
8:04 am: Last 12 days’ average daily moves
As volatility reigns on the Street, the last 12 days’ daily average moves — in both directions — have far surpassed the average daily moves for all of 2019. Here are the numbers. – Schacknow, Stevens
Dow Jones Industrial Average: 3.56% (past 12 days) vs. 0.56% (all of 2019)
S&P 500: 3.44% (past 12 days) vs. 0.57% (all of 2019)
Nasdaq: 3.32% (past 12 days) vs. 0.73% (all of 2019)
7:56 am: Travel stocks take a hit again
Airline and cruise line stocks fell broadly in the premarket as uncertainty around a fiscal response to a coronavirus-related economic slowdown pressured them once again. American, Delta, United and JetBlue all fell more than 2.8%. Norwegian Cruise Line and Carnival Corp. slid 4.5% and 7.4%, respectively. All six of those stocks were squarely in bear market territory entering Wednesday’s session, down more than 20% from their 52-week highs. —Imbert
7:54 am: PepsiCo to acquire energy drink maker Rockstar Energy in a $3.85 billion deal
PepsiCo said on Wednesday that it has agreed to buy Rockstar Energy for $3.85 billion as it looks to increase its footprint in the energy-drinks space. The food and beverage giant said that it does not expect the acquisition to have a material impact on its revenue or earnings per share in 2020. If regulators approve the deal, it is expected to close in the first half of 2020. – Stevens
7:50 am: Treasury yields fall amid unclear fiscal plans
The yield on the 10-year Treasury note dropped 6 basis points to 0.69% Wednesday morning. Investors continued to seek safety before any fiscal stimulus to offset the impact of the coronavirus materializes. President Donald Trump had pitched a 0% payroll tax rate, but CNBC reported that the White House is far from ready to roll out specific economic proposals. “Regardless of how equipped one might assume Capitol Hill is at determining and delivering a sufficient round of fiscal stimulus, the political process itself adds yet another level of uncertainty,” said Ian Lyngen, BMO’s head of U.S. rates. The benchmark Treasury yield tumbled to an all-time low of 0.32% on Monday amid stocks’ worst one-day sell-off since the financial crisis. – Li
7:24 am: Stocks set for sharp losses at the open, Dow poised to drop more than 600 points
In this market, it will come as no surprise that Wednesday is shaping up to be another volatile day on Wall Street. U.S. stock index futures are pointing to losses across the board at the open. All major averages are set to drop more than 2%, with the Dow Jones Industrial Average poised to open 693 points lower.
The leg lower comes after stocks roared back to life on Tuesday. After spending some of the day in negative territory, the Dow surged in the final hour of trading to post a gain of 1,167 points. Despite the quadruple digit gain, it only accounted for a little more than half of the 2,014 points the Dow shed on Monday.
Uncertainty continues to grip the Street. The yield on the U.S. 10-year Treasury is around 0.7%, and oil prices are under pressure again as tensions between powerhouse producers Saudi Arabia and Russia rise. On Wednesday the Bank of England cut its benchmark interest rate by half a percentage point, making it the latest central bank to try and quell some of the unease. – Stevens
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