The COVID-19 crisis and its threat of a global recession have dragged Wall Street to its worst week since 2008, with panic sales leading to cumulative losses of 17% on its leading indicator, the Dow Jones Industrials, and volatility. that has been extended to the Treasury or oil bond markets, despite the efforts of the US authorities. for protecting the economy.
The American square suffered the third worst day in its history this past “Black Monday”, when the Dow Jones fell as it had not done since 1987, almost 13% or 3,000 points, although in the following sessions the indicator has been mounted at a roller coaster whose strong ups and downs have allowed it to regain some ground.
Finally, the Dow has fallen below the 20,000-point barrier, erasing all the gains that President Donald Trump used to use as a barometer of his presidency since he entered the White House.
The accumulated data of the last five days on the New York Stock Exchange are in themselves a balance of damages: the main indicator of Wall Street has lost 17.30% of its value, the selective S&P 500 14.98% and the Nasdaq 12.64%.
All this is the result of the increase in cases of coronavirus in the United States, already more than 16,000, and the redistribution of the outbreak from China to Europe, which is disrupting the global supply chain and has led central banks to coordinate and carry out actions. drastic to inject dollars into financial systems.
“The situation has progressed rapidly beyond a demand ‘shock’ or a supply ‘shock’, it is an unprecedented interruption and a reorganization of economic life. There are still few clues about the depth of the fall in consumption, But the data will be unheard of. Unemployment claims will count in the millions next week, “Wells Fargo analysts said in a note.
The Federal Reserve has cut interest rates to the range of 0% to 0.25% and announced a quantitative easing of $ 700 billion to ensure the flow of money to homes and businesses, among other measures.
And while in the US As a nearly $ 1 trillion fiscal stimulus package proposed by the Donald Trump government is debated, authorities in highly populated states like California and New York have ordered their nonessential businesses to shut the doors and their residents to stay home for prevent the spread of the pathogen.
Volatility, measured by the Vix index, soared this week around 15% and hit a peak not seen since the last financial crisis, coinciding with panic sales not only of stocks, but also of safe assets such as public debt or gold, in a frantic search for liquidity by investors.
In that sense, there was an increase in the yield of the 10-year Treasury bond, which had already recently touched lows never seen before, and a decrease in the price of gold, movements that surprised even the economist and Nobel Prize winner Paul Krugman.
For its part, Texas intermediate oil has plunged 29% accumulated this week, to $ 23.53 a barrel, due to the sharp drop in demand due to the interruption of economic activities and the increase in the supply of Saudi Arabia.
Analysts at the firm Charles Schwab indicated in a note that next week “it will be interesting to see if the extraordinary measures taken to help the economy and financial markets, and the information on the fiscal stimuli that are underway, can help calm investors’ fears. “