Home » Business » Trump announces “the biggest stock market hike in yesterday’s history”, but many investors believe the worst didn’t end in coronavirus panic

Trump announces “the biggest stock market hike in yesterday’s history”, but many investors believe the worst didn’t end in coronavirus panic


“THE BIGGEST INCREASE IN THE STOCK MARKET IN HISTORY YESTERDAY!”


– President Donald Trump

This is Trump on Saturday morning, referring to Friday’s wave of the Dow Jones Industrial Average
DJIA,
+ 9.36%
,
the S&P 500 index
SPX,
+ 9.28%

and the Nasdaq Composite
COMP,
+ 9.34%
,
which has been the largest daily percentage gains of the main equity benchmarks since 2008.

Dow’s gain on Friday was the biggest ever in terms of points, as much as Thursday, Monday and Wednesday, respectively, had produced the biggest drop, the second largest and third largest of a day in the index. blue-chip.

Friday’s rally in US stocks nearly made up for the losses it had suffered the day before, when the market saw its worst day in terms of percentage loss since the crash of Black Monday in 198. The Dow fell approximately 20% from its highest record. This puts him in a bear market.


‘[W]we can all agree that panic has infiltrated various aspects of our lives in the past few days. ”


– Frank Cappelleri, Instinet

Friday’s gains followed a week of unmatched market volatility that sparked numerous references to the financial crisis 12 years ago and the 1987 crash, except that in some respects this crisis proved to be more intense and disturbing for market participants .

“Investor psychology is clear only in hindsight, but we can all agree that panic has infiltrated various aspects of our lives in the past few days,” wrote Frank Cappelleri, Instinet’s executive director, in a note from research to customers on Friday.

In fact, all three stock indices have collapsed in the bearish market territory from record highs to their fastest clips in history.

Check out Trump’s tweet here:

Probably the catalyst was COVID-19, the infectious disease that was first identified in Wuhan, China in December and has quickly spread to over 100 countries, has infected 147,000 and has caused 5,500 victims so far, according to Johns Hopkins University.

Friday’s rally came after Trump declared a national emergency, opening up access to $ 50 billion in state and locality funding to combat the coronavirus pandemic, while claiming that the country was speeding up tests and expanding capacity. of hospitals and doctors to provide treatment for pandemic disease.

Focusing on a higher Friday explosion for risky activities, however, could be a mistake against the background of the turbulent nature of the week. The Dow, for example, experienced fluctuations of at least 1,000 points in the five consecutive sessions of the week. In other words, the Dow has booked moves of around 5% or more for each trading session of the entire week.

Date

Change of Dow point from 9 to 13 March

Dow% change

March 13

1,985

9:36

March 12

-2,352.60

-9.99

March 11th

-1,464.94

-5.86

March 10

-1,167.14

4.89

March 9

-2013

-7.79

Amidst those monstrous moves, the blue-chip index saw a rapid conclusion in the longest bull market in history, which, perhaps ironically, turned 11 on Monday and actually died by Wednesday, when the World Health Organization The disease spread by the new coronavirus SARS COV-2 has gone into a pandemic.

It is a measure of the implied volatility on Wall Street, Cboe’s volatility index
VIX,
-23.37%
,
Friday saw an intraday reading that has been its highest since 2008 – a period that saw it record a record high of around 80. The index, known colloquially as the “fear gauge”, has an average reading historic of 19 or 20.

Another measure of market fear, CNN’s Fear / Greed index, hit 2 on a scale of 100, its lowest reading in its history, with lower readings indicating more extreme fear.

The week was also marked by a $ 15 trillion Treasury market seizure, which led to Federal Reserve intervention. The central bank took steps to stem what described an “unusual upheaval” in the US public debt market by injecting approximately $ 1.5 trillion into Wall Street’s major financial markets.

The Fed’s rate-setting body, the Federal Open Market Committee, is now expected to cut federal fund rates by a full percentage point on Wednesday March 18, following the end of the two-day political meeting. This followed a reduction in the emergency half-percentage point rate on March 3. That first intermittent interest rate cut in 12 years brought the target rate in the range of 1% to 1.25%.

Further action is expected by monetary policymakers and other parts of the government as the world attempts to reduce the substantial economic damage already caused by the coronavirus pandemic

To read: The Fed soon saw interest rates cut to 0% in an attempt to help the coronavirus storm

Friday’s earnings, while obviously the opposite of anyone who doesn’t bet on the market, are viewed by some market experts as potentially more indicative of a bear still lurking than a clear signal.

Market extras:Wall Street fears “flashbacks to 2008” with forced sale in the US $ 9 trillion corporate bond market

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