Last week, S&P 500 had its worst week of this decade and investors were worried about such outcomes in the market. Experts believe that the only cure to such a situation is time.
Every time there has been a noticeable drop in the stock market, Wall Street investors always choose to buy the dip. This, in turn, helped the market rake in more money and snuff out the crisis. However, this time around the investors have remained at the bay when it came to buying the dip, Due to the massive dip and no sure sight of where it will end; the investors are only selling off the stocks so that they can reduce their losses and maybe pile up the amount in government bonds or gold.
As a result of this, the previous week marked the worst weekly rout of the market since the year 2008.
With the number of coronavirus cases on the rise throughout the world and a major part of China facing a lockdown, the stability of the stock market is a distant dream. As the virus spread more the consumer spending will take a hit due to the already troubled supply chain throughout the world. This stage of volatile swings will continue unless the government can show that the rise of coronavirus cases has decreased or stopped. On the other hand, Federal health officials have said that the virus has kept on increasing and will do so for the coming weeks. America has chances of more cases and new viruses in the area which further threatens the key market players.
The Fed yet stands tall and suggests that it will definitely help the US Economy to take a boost and sustain this period of slowdown. The recent 10 percent decline is the fastest in history and hence it will take time for the investor confidence to grow and again and get rid of the complacency. As of yet, even if the market turns around and shows a boost, the investors will take their time to witness evidence of the boost and then only put in their money into the market.
However, the real impact of the virus and its outbreak on the economy will be visible weeks later when government reports are out. Anything that we see now is an immediate effect of the headlines regarding the virus and this is more the reason every investor is taking a step back before actually “buying the dip”.