The free fall of the US stock market has brought it to a bear market territory in record speed and it is a history in itself. This is probably the worst month in the span of the last 90 years and hence traders and investors are desperately seeking for some relief at this moment. When will this free fall come to an end and when will the sell-off spree finally stall, well, the stock market gave hints to some of these questions finally.
FED can’t cure this market
This is probably the most significant thing we all have learned in the past couple of weeks. The Federal Reserve is out of ammo now and it did whatever it could have but it didn’t show any positive signs for the market. The Fed cut down its interest rate to zero and the market instantly hit a sell-off spree and “limit down”. When the chairman announced QE – Forever, i.e., a commitment to buy assets indefinitely, the market did rally for a couple of hours before it faded back again. Rightfully speaking, these are historic monetary actions taken and yet they had no impact on the US stock market. In 2008, the stimulus from the Federal Reserve did work wonders but not this time around. So, what is it that will stop this bloodbath at Wall Street?
The Senate stimulus
Traders are eagerly waiting for the Senate to pass the multi-trillion-dollar rescue package. The money from this package is expected to go directly into the hands of the people and businesses in the states. The market futures have surged high in anticipation of these stimuli and hence it is a hint that the market will have some respite when the Congress agrees to pass this bill. The stock market requires fiscal relief than monetary policy from the Fed.
However, this won’t be enough to pull out of the bear market territory.
America needs to get back to work
Last night When President Donald Trump reported that within 15 days everything will start working in the US, the stock market futures took a substantial jump!
This is a final clue from the market that America needs to resume its daily work and this is when the market will finally gather back its momentum. Traders are thriving for the nation to come back to work and there’s no fiscal policy or relief that can beat this ultimate solution. The President seemed confident and desperate to get things back to normalcy in the state within the next 15 days. The huge sell-off, unemployment, and closures of small business is what panicking the investors in the market. The possibility of another Great Depression in the offing is further pulling back the indices from climbing.