Stocks Suffer Worst Day Since 1987

They recommend targeted temporary business tax breaks, expanded federal subsidized business loans and guaranteed bank loans, an increase in food stamp disbursements, temporary Medicaid expansion, longer unemployment benefits, expanded paid leave for workers, additional state and local aid, more infrastructure spending and a 90-day suspension of the payroll tax, which is akin to a similar Trump proposal.

"The market is looking for some type of policy response that might mitigate the economic impact of the coronavirus," says Jeffrey Kleintop, chief global investment strategist at Charles Schwab.

The financial crisis of 2008, Kleintop explained, was a financial problem, so the solution had to come from the markets. This time it's a health problem, so the solution has to come from efforts to contain the virus.  In the interim what's needed, he says, are "efforts to help businesses have credit lines to keep operating until the health issue is contained. Pandemics tend to end run months, not a year or more."

In the meantime the economy is probably in a recession, Gary Shilling said on Bloomberg Radio, noting that even before the coronavirus hit, the U.S. and global economy, including China, were already slowing. "Take a slowing economy and then create the shock of the coronavirus. That's what has put us into recession."

Richard Bernstein, the CEO and chief investment officer of Richard Bernstein Advisors, agrees with Shilling that the global economy was already faltering before the virus hit. The pandemic is a "black swan" event that caused a bear market because the fundamentals were already deteriorating, said Bernstein in a conference call Wednesday.

U.S. GDP was growing below average for three straight quarters, corporate profit growth was slowing and U.S. small-cap stocks and global stocks were already in a "deep profit recession," said Bernstein. The big drop in oil prices only added to market worries.

He advises investors not to panic and to have "an immense amount of patience," saying "the fundamentals will turn much more slowly than investors expect."

On Capital Hill, congressional Democrats and Trump administration officials were negotiating Thursday afternoon on an economic relief package to blunt the economic impact of the coronavirus pandemic. House and Senate leaders vowed to forgo next week's scheduled recess in order to work on a legislative response to the coronavirus outbreak. 

Trump is considering declaring a national emergency, which would free up funds to combat the economic and health care fallout from virus.

— Check out Trump Mulls Declaring National Emergency Over Coronavirus; House Readies Aid Bill on ThinkAdvisor.