Week-In-Review: Another Brutal Week For Stocks
Stocks were crushed (again) last week as the number of confirmed Covid-19 cases continues to grow. The market closed near the lows for the week as the market continues to plunge. Last week we saw global governments and global central banks throw trillions of dollars into the global system to help stabilize the selling. For now, the sellers are relentless and in clear control until we get any signs of “good” news. Stay indoors, stay safe, and stay healthy. This too shall pass.
Monday-Wednesday’s Action:
On Sunday, the Federal Reserve slashed rates to zero and announced a new $700 billion round of QE! Futures still fell limit down and that paved the way for Monday’s shellacking. Right at the open, stocks fell 7%, triggering a circuit breaker which closed the market for 15 minutes. Then, the market re-opened, stabilized for a few hours and began to plunge into the close. After all was said and done, the Dow Plunged -3,000 points or 12.93%! That was the second-worst single day percent decline behind the 1987 Black Monday crash! On Tuesday, the market jumped 1,000 points rebounding after Monday’s 3,000 point meltdown. President Trump asked for $1 trillion in stimulus to help the economy navigate these unprecedented times. In other news, the Federal Reserve added $1 trillion in “liquidity” to help banks keep the primary dealers (the 24 largest banks) stay liquid during this crisis. Finally, the government is floating the idea of giving every American cash to help them navigate this very tough time. Overnight, futures hit limit down after news broke that Covid-19 spread to all 50 states and the number of cases topped 200,000 worldwide. Stocks tanked on Wednesday and triggered another circuit breaker intra-day after Bill Ackman warned that “hell is coming” and he wants President Trump to shut America down for 30 days to contain the virus. Ackman said that the stock market would soar if the country shut down. By the close, buyers showed up and the major indices closed in the upper half of their daily ranges, which is normally a bullish sign (especially when it happens after a big decline). Finally, oil prices plunged and it was the 3rd worst day in the history of crude oil as the violent bear market in oil continues to wreck havoc on the frail industry. In other news, the ECB announced $750 billion in emergency stimulus to help boost both Main Street and Wall Street (capital markets).
Thursday & Friday Action:
On Thursday, stocks rallied after oil prices enjoyed their best percent gain in history. Oil prices jumped 23% after plunging over 70% since January. In other news, Billionaire investor, Ray Dalio, gave a dire outlook for corporate America. More areas around the world went into “lockdown” as California, London, and New York told its residents to stay home. Stocks fell hard on Friday ending another brutal week on Wall Street.
Market Outlook: Coronavirus Hits Wall Street
The short-term trend is down as the major indices imploded in late February after fear spread that the coronavirus will cripple the global economy and spark a world-wide recession (or worse). Global governments and global central banks stepped in with massive rate cuts to help “stimulate” markets but that is doing very little to curb the selling. As always, keep your losses small and never argue with the tape.
