New York / Düsseldorf The US is increasingly at the center of the corona crisis. While the number of infections is increasing, the government and Congress have so far not been able to agree on a comprehensive package of measures to support the economy. New aid from the US Federal Reserve therefore fizzled out on Wall Street on Monday.
The Dow Jones Industrial lost around three percent to 18,592 points. It widened the losses of the disastrous previous week and fell to its lowest level since November 2016.
With a setback of 2.9 percent to 2237 points, the market-wide S&P 500 came from the trade, which was again characterized by strong fluctuations. The technology-heavy Nasdaq Composite dropped 0.3 percent to 6,860 points.
The papers from Boeing grew 11.2 percent to around $ 106. According to exchange traders, some investors apparently saw the end of aircraft production in the US state of Washington as good news because it could save money. Finally it was with the papers of the airbus-Rivals steadily gone downhill.
A new, historic set of measures by the US Federal Reserve gave investors a little bit of confidence again: The Fed announced another massive expansion of its securities purchases on Monday. It plans to buy unlimited government bonds and certain mortgage-backed securities. In the future, it also plans to accept student or credit card loans as collateral for lending to commercial banks. Among other things, these new measures are intended to support the flow of credit to households and small businesses.
“The Fed goes all out,” said analyst Michael Hewson of broker CMC Markets. With the measures, the central bank is not only jumping on Wall Street, but is also trying to help the US citizens directly. The Fed also appears to have decided to take radical measures in view of the rapidly rising dollar.
Scott Brown, chief economist at financial services provider Raymond James, commented on the Fed: “You are now throwing everything into balance. These measures alone don’t do anything against the virus – that’s the big problem. They help, but we still need stimulus and we need many of them. We have to direct it to the people who will really suffer. “
At government level, negotiations for an economic stimulus package of more than $ 1 trillion (900 billion euros) had previously stalled in the United States. The Democrats had blocked the targeted rescue package on the first try.
Goldman with a pessimistic forecast
Investors are increasingly focusing on the USA as a result of the corona crisis. After New York and California, other states called on their citizens to stay at home. “The United States is now threatening to become the new epicenter of the corona pandemic after Europe,” said Jochen Stanzl, market analyst at CMC Markets. Goldman Sachs is now anticipating a drop in real US gross domestic product of almost a quarter in the second quarter.
“The corona crisis – or more specifically, the answer to this crisis – is a physical, as opposed to financial, limitation of economic activity that is unprecedented in post-war history,” said Goldman Sachs. The investment bank expects the global economy to decline of around one percent this year.
This is a stronger economic slump than in the year after the global financial crisis in 2008. The analysts from Morgan Stanley warned of serious damage to the global economy due to the increasing spread of the new lung disease.
With agency material
More: The leading German index makes up almost 600 points after the new Fed package, but then closes in the red.