DOW Jones index enters bear market as Coronavirus fear grows deeper

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It was a debacle for the stock market on Wednesday. Oil prices crashed once again, the US credit market deepened further and all of these happened just after the World Health Organisation regarded the virus surge as “pandemic”. On the other hand, the US government failed to offer any concrete stimulus to the market post-Trump’s claim of offering “very drastic action” to the stock market for betterment.

The recent data about the spread of coronavirus brought the DOW Jones Industrial average into a bear market. It also marks the end of the longest bull market for American equities. The index dropped 5.9% and ended the day with a total of 20% loss from its February closing mark. The S&P 500 followed suit and entered a bear market with a drop of 19% from its previous month’s high.

The declaration from WHO further clarified the fact that the spread of coronavirus will steal the zeal from the global economy. The promises of President Donald Trump weren’t brought to life at all and later he was reported as saying that the US didn’t need these measures as of yet. He believes that the US economy can easily get back to its feet if the problem is got rid of quickly. On the other hand, the European officials are planning to make major moves soon to control the negative impacts of the coronavirus on the global economy.

Leading companies in the worst-hit industries were drawing down their credit lines to battle the impact of the virus on their stocks and business. Such moves and signs further added to the anxiety of the investors and traders at Wall Street. As of yet, the market has no idea of when the spread of coronavirus will finally come to a halt and this will add to the market volatility. There is no pre-planned model to sustain such a financial situation and hence every step is completely based on intuition rather than tired and tested ideas.

  • Asian equities lost around 1.7%
  • As many as 10 stocks retreated in the S&P 500. The average drop faced by the industries was about 3.9%
  • Crude oil prices dropped 4.2% and came below $33/barrel

The US stock has been going downhill since the last 3 weeks on the trot and the investors are extremely anxious about what else is about to come. Though the US President Donal Trump has promised of drastic action to hold the market strong, nothing seems to be certain. The market believes that such huge damage cannot be controlled now with whatsoever measure the government has kept in reserves. The time to act in advance has already passed and this is the worst phase already for the US stock market. The lack of clarity in the fiscal policy is something that the people are constantly complaining about and everyone waits to see what’s next!