Stocks Lose Nearly All Gains Under Trump Presidency As Market Falls Another 6%

Topline: Stocks plunged on Wednesday, reaching a new crisis low—and nearly below the levels they were at when Trump first took office—as the coronavirus pandemic continues to take a toll on markets and inflict damage to the U.S. economy.

  • The Dow Jones Industrial Average dropped 6.3%, nearly 2,000 points. The S&P 500 was down 5.2%—breaking below its low point during the Christmas 2018 sell-off, while the Nasdaq slid 4.7%.
  • The Dow has nearly fallen below 19,827—the level it was at when Trump was inaugurated. That means that all of the stock market gains during Trump’s presidency—which he has often touted are as a result of his leadership—have almost been completely wiped out.
  • Wednesday was the eighth consecutive day where the S&P 500 swung more than 4% in either direction, which has never happened before—and the trend looks like it will continue. That level of market volatility is far worse than the previous record of six days in November 1929, during the Great Depression, according to LPL Financial.
  • As nervous investors grappled with the ongoing uncertainty from the coronavirus, billionaire investor Bill Ackman urged President Trump to shut down the country. “Hell is coming… America will end as we know it,” he said on CNBC. “I’m sorry to say so, unless we take this option.”
  • Ackman’s emotional interview, which at times verged on panic, quickly prompted a larger market sell-off: Trading was halted after a “circuit breaker” mechanism was tripped up—for the fourth time in a week—by the S&P 500 falling more than 7%.
  • Stocks briefly bounced back before the market close later in the day, however, after news that the Senate has obtained the votes to pass legislation extending paid leave and unemployment insurance for struggling Americans. (That bill was already passed by the House and is separate from the $1 trillion relief package floated by the Trump administration.)

Big number: Oil prices also plummeted on Wednesday, at one point down by as much as 24%, which would be the third worst day on record. Oil is now near an 18-year low as the coronavirus pandemic—and an ongoing price war between Saudi Arabia and Russia—continues to hurt both supply and demand.

Chief critic: “Only in this market would a -5% session in the S&P 500 feel like a huge victory,” Vital Knowledge founder Adam Crisafulli said in a note on Wednesday. He points out that the big story of the day was the absolute “carnage” in stocks related to airlines, travel, leisure, retail, restaurants and energy—with those sectors undergoing “complete meltdowns” due to the coronavirus (and with energy, the Saudi-Russia oil price war).

Crucial quotes: “Though daunting, once the market finds a bottom, which is where the index begins to consistently move higher than the previous market low—and we believe it is ‘when’ not ‘if’ the market finds a bottom—it may provide an attractive opportunity for long-term investors to consider adding risk to portfolios,” says Burt White, chief investment officer for LPL Financial.

What to watch for: Fiscal stimulus measures. Investors are eagerly awaiting more details on the Trump administration’s massive $1 trillion coronavirus relief package. That package will reportedly include up to $550 billion in direct payments or tax cuts to individuals, up to $300 billion in small business loans, up to $100 billion in airline and industry relief, as well as potentially $250 billion toward direct payments for Americans in need, according to the Wall Street Journal.

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