Dow Jones Industrial Average futures plunged more than 1,000 points prior to the opening bell Monday, even as the Federal Reserve slashed interest rates to zero and Fox Business Network host Stuart Varney is predicting the U.S. may be heading toward a recession.
“When the market opens this morning, you are going to see a major selloff, there’s no way around it,” Varney said, adding that he suspects “we’re going to go down 7% very, very quickly.”
“Trading will be halted for 15 minutes, then we’ll get back up again,” he explained. “But there’s nothing that I can see that’s going to stop this major, major selloff today.”
The market did just as he predicted, as seen from CNBC:
Stocks tanked on Monday, triggering a key market-wide “circuit breaker” designed to prevent the market from falling through the floor.
The S&P 500 plunged about 8% right after the opening bell, tripping the level one circuit breaker that resulted in a trading halt for 15 minutes.
Co-host Steve Doocy cited dismal performance numbers in China, where industrial output is at the lowest level in 30 years and retail sales have tanked, suggesting this runs counter to the belief by some administration officials that there will not be a recession.
“That’s precisely right,” Varney said. “We are, I think, headed into a recession. I don’t think there’s any way around it. Because if you look at the experience of China, as you related, in the first couple of months of this year, as they were in the middle of this crisis, industrial production went down 13% — down 13%. Retail sales down 20%.”
“If the same thing happened here, you would have a major recession, bordering on depression, with those kind of numbers,” he insisted. “That’s one of the reasons why the market is down so sharply this morning,”
Of all the people hurt by the tanking numbers, Varney said retirees may be feeling it the worst.
“And I particularly feel bad for those people who are retiring or about to retire,” he said. “If they’re relying on money from their 401(k) or IRA, largely invested in stocks, they’re probably down 25% compared to where they were four weeks ago.”
Varney would go on to say that he is unsure of how the market will react when the Senate sends a coronavirus relief bill to President Trump’s desk.
There are questions about just when that will be.
The Democrat-run House approved a massive coronavirus bill on Saturday that had been hammered out by Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.
The measure passed 363-40 and received the blessing of the president, but approving the measure in the U.S. Senate is no sure thing. The House is tasked with fixing some technical problems in the drafting of the legislation, and the upper chamber will have to wait on that to happen before taking it up.
The coronavirus relief bill is massive and Fox News reported that “no one truly knows the cost of the measure. It’s anywhere from tens of billions of dollars to the hundreds of billions of dollars.”
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