Are We Heading for the Next Global Recession? Coronavirus Fuels Stock Market to Hit Its Lowest Since 1987
Despite the overnight fiscal policies that Trump’s administration had implemented, the stock market continues to plunge even deeper. Along with the US government, officials and world leaders scramble to stabilize their own economies amidst the ongoing threat of the coronavirus pandemic.
Monday morning was an especially dismal day at the New York Stock exchange as the Dow Jones Industrial Average Index hit an almost 3,000-point decline or close to 13%. As reported by the Patriot Hill, the stock market hit Level 3 halt all in one day and forced trading to end earlier than expected.
According to trading reports, the Dow fell by a whopping 2,997 points while the S&P 500 was not far behind, hitting 11.98%. On the other hand, the second leading stock market, Nasdaq Composite, also recorded a 12.32% decline. It is followed by the Russel index, which fell to 14.27%, creating a huge blow on the small businesses sector.
As local governments ordered a state-wide lockdown, businesses ranging from large to small companies suffered tremendous loss from the mandate. In fact, an economist claimed that the looming threat of a global recession “is already here.” According to an interview from David Wilcox, former head of research and statistics at the Federal Reserve Board, ten days ago, the idea of a global recession seemed to be quite “uncertain.” However, things have drastically changed as the world continues to stay on a standstill.
Kevin Hassett, a former top economist for the Trump administration, admitted to CNN that “The odds of a global recession are close to 100% right now.” The virus had affected almost all business sectors. In fact, during January and February, the Retail Sales went down by a significant 20.5%. Shipments were also delayed, and even factories have closed down indefinitely.
As traders tried to keep up with the substantial decline, sell-off in stocks had become even more intense after the administration suggested dire measures that sacrificed economic stability. Those who have been greatly affected by these new policies were bars, restaurants, or businesses that hold public gatherings or events. The state-mandated lockdowns and travel bans also greatly affected the airline industry.
While Democrats and left-winged media such as the New York Times claim that Trump prioritizes the stock market rather than focusing on the pandemic, the White House continues to deny such allegations. As of Monday, the Federal Reserve had already prepared $700 billion to implement large scale purchases of US stocks, which aims to stabilize the economy. In their official statement, the Feds announced that $500 billion will be used to purchase Treasuries while $200 billion were allocated for securities. Moreover, the US chamber had also released a toolkit to help small businesses cope amidst the rising concern of coronavirus.
In fact, even President Donald Trump had recognized the stock market crash but believed that what matters most is to save American lives. “The market will take care of itself. The market will be very strong as soon as we get rid of the virus,” Trump assured the public.