By Kim Khan
Investing.com - As the World Health Organization officially declared Covid-19 an epidemic, the Dow officially closed in bear market territory, down 20% from recent highs.
There was late buying to support the broader market slightly today, but there’s little doubt now stocks will keep sliding until investors can really get their arms around how much impact this disease will have.
That means virus-related headlines will be setting the tone of trading again, which are coming apace. Less than an hour after the close of trading Italy announced it would be closing all shops except groceries and pharmacies. In the U.S., the NCAA announced its March Madness basketball tournament would be played without spectators.
Here are three things that could move the markets tomorrow.
1. Trump Set to Speak
President Donald Trump will address the nation from the Oval Office about Covid-19 at 9:00 PM ET today (01:00 GMT Thursday).
From a market perspective any measure the federal government will be taking to prevent the spread of the virus, such as further air travel restrictions, will be as closely watched as any mention of fiscal stimulus.
House Speaker Nancy Pelosi and Treasury Secretary Stephen Mnuchin spoke by phone today, but there were no reports of any concrete moves to help the economy.
Movement in stock index futures as the president speaks will be an interesting barometer of how much Wall Street believes Trump’s statements, which have often conflicted with those of his health officials.
For those scoring at home, for the S&P 500 to enter into a bear market (the measure of whether the 11-year bull run is over), it would have to close below 2,714.82. It got there intraday today but closed higher.
2. ECB Expected to Ease
The European Central Bank’s governing council will meet tomorrow, with a package of stimulus measures expected.
Its monetary policy statement will arrive at 8:45 AM ET (12:45 GMT).
The “fact that they have negative yields is not dissuading investors to expect additional cuts,” Marvin Loh, Global Macro Strategist at State Street (NYSE:STT) Global Markets, said in a note.
The Bank of England cut rates by half a point today and the ECB should compare and contrast the analyses of the BoE and the Federal Reserve, “focusing in particular on the range of tools deployed and why, the overall framework, the communication, and the coordination,” Allianz (DE:ALVG) Chief Economic Advisor Mohamed El-Erian tweeted.
3. Wholesale Inflation on Tap
On the economic calendar there’s more inflation data to be had, although it's again looking a little stale for the current market-moving crowd.
The Labor Department will issue the latest producer price index (PPI) at 8:30 AM ET (12:30 GMT).
Economists expect that the February PPI fell 0.1%, compared with a rise of 0.5% the month before, according to forecasts compiled by Investing.com.
The core PPI, which excludes volatile food and energy prices, is expected to have risen 0.1%.