If you think people are worried when stock prices are falling, imagine what happens when they all go to zero. That's what happens when you close the markets: stocks can't be sold and thus have an effective value of zero.
Much of the fall so far is bringing prices back to reasonable levels after a record-setting bull market. Not that that's especially fun news; between that and a genuine recession coming up, a lot of people will lose a lot of money. But it means that, as scary as this is, it may also be necessary, and even beneficial. (In the "long run", that is, and in the "big picture". Still sucks for a whooooole lot of people for a very long time.)
Think of it as putting someone in a medically induced coma. It's not really a terrible idea. Anyone working in finance could enjoy the downtime and use their time to help local city/hospital/neighbors etc. US bails out finance, finance in turn pitches in. Could be a nice win-win.
Well typical financial advice is to keep at least 3 months of expenses in a savings account or other very liquid account as an emergency fund. So plenty of people likely follow that advice.
The US govt just said that strict social distancing measures could last till August, plus there could be a recession coming. It's entirely possible that many people could be laid off and may run low on emergency funds if this goes on long enough. And many Americans could be facing huge medical bills to pay for treatment.
I'd say it's extremely likely that some unfortunate people are going to need to do hardship withdrawals from their 401ks to avoid eviction. Not everyone is in such a secure position that they could be cut off from their assets all in the name of calming the financial news.
There are many institutional investors such as pension funds and insurance companies (whatever they call their holdings) that rely on returns from things like stocks.
Since they wouldn't be able to sell stocks, they would start selling everything else they've invested in.
Same would go for anyone else requiring cash.
Then everyone holding the other stuff that is liquid, will sell it because why hold onto a plummeting asset when the only reason to own it is the value?
The same reason why not testing for the virus doesn't stop its spread. Markets can spread psychological panic very quickly, but a lot of the short term behavior here is based on very short term bets about what other people are going to do on average. Give the market a month to integrate some information that is relevant over slightly longer timescales and we'll see where it thinks we are.
It will just make things much worse. Without a liquid market for stocks, no matter how bad the whole economy would grind to a halt at some point. Though we're a long time away from the next IPO (by my guess) as long as there are buyers the market should stay open because that will allow a lot of entities to fulfill their obligations. If you close that avenue off there will be a severe knock-on effect from institutional investors that suddenly find themselves without liquidity. That's a scenario that I'd rather not contemplate.
The 'no buyers' scenario in fact did play out two weeks ago, there were 1.8 million shares of Shell for sale on the Amsterdam exchange without buyers. Shares to be sold without reserve, and yet, no buyers. It took a long time to fill those orders and that's why Shell did not have a price on the board during that time. Never, ever, happened before.
Much of the fall so far is bringing prices back to reasonable levels after a record-setting bull market. Not that that's especially fun news; between that and a genuine recession coming up, a lot of people will lose a lot of money. But it means that, as scary as this is, it may also be necessary, and even beneficial. (In the "long run", that is, and in the "big picture". Still sucks for a whooooole lot of people for a very long time.)