The US stock market is making the most volatile moves since 1987 amid increasing fears of economic meltdown, the looming threat of recession, and massive growth in unemployment.
The Coronavirus inspired market selloff has been severe, wiping off all the gains in a single month that the Dow Jones Index generated under Trump’s presidency since 2017.
The S&P 500 has also been following the bearish trend, losing close to 30% of its value in the last month.
Indeed, the circuit breaker triggered for the fourth time in the last eight trading sessions. Circuit breakers are designed to halt trading for a few minutes to help stop panic-selling.
The Fed’s initiatives of bringing interest rates to the zero range along with the $750 billion economic package has so far failed to appease investor sentiments.
Donald Trump directed authorities to increase liquidity for all sizes of businesses to avoid bankruptcies. Many large industries such as the aerospace, airline, and travel industry are now seeking help from the government in the form of bailout packages.
“There’s no clarity. We don’t know what the real effects from these monetary and fiscal policies are going to be for a while,”Rich Sega
“There’s no clarity. We don’t know what the real effects from these monetary and fiscal policies are going to be for a while,” says Rich Sega, global chief investment strategist at asset manager Conning.
“We need to see data that shows that the infection rate has peaked.”
Airline stocks lost more than half of their value while hotel and travel companies are also facing massive losses.
Automakers are struggling to operate their production facilities due to lockdowns across Europe and the Asia Pacific.
Oil prices lost more than half of their value on declining demand caused by coronavirus fears and travel restrictions along with the oil market war currently underway between between some of the largest producers. Recently, Saudi Arabia and the UAE announced they would pump more oil to enhance their global market share.
Oil companies are being brought down to earth as Brent crude plunged to $25.58 a barrel, while US crude slid to US$22.35 – the lowest level in nearly two decades.