NEW YORK-On Monday, the Wall Street stock market fell 9% in early trading as a large number of economies were approaching shutdown from airlines to restaurants. Some investors said the Fed's urgent action on Sunday evening to support the economy and allow financial markets to run smoothly again could add to concerns.
Trading stopped within the first few minutes of trading, and trading of the S & P 500 Index stopped. The losses deepened further after the transaction was resumed. Selling is equally positive in global markets. European stock markets and crude oil both fell about 10%. Probably the brightest spot in the world is Japan, with the Bank of Japan announcing further economic stimulus, while the stock market is still down 2.5%.
The spread of coronavirus is causing businesses around the world to close down, which is wasting revenue. JPMorgan Chase said this has led economists to sharply cut expectations for the coming months. JPMorgan Chase said the U.S. economy may shrink at a rate of 2% per year this quarter and from 3% in the April-June quarter. For many investors, this fits the definition of a recession, and the question is how long the recession can last.
A strategist at Goldman Sachs said that the S & P 500 Index may fall to 2,000 points by the middle of the year, which will be a recession. It fell 41% from a month ago record and then rebounded to 3,200 at the end of the year.
American Airlines and United Airlines both announced significant flight cuts over the weekend because customers cancelled travel and the US government restricted travel. Other travel companies have also seen a sharp drop in customer demand. Followed by restaurants, cinemas and other crowd-dependent businesses.
The Federal Reserve has been doing everything in its power to help the economy, and has reduced short-term interest rates to the lowest level over the weekend. Hit a record low of almost zero.
The company also stated that it will also purchase at least 500 billion U.S. Treasuries and 200 billion U.S. dollars in mortgage-backed securities to help calm the U.S. Treasury market, which is the foundation of the world financial system and affects the stock market and the world Bond prices. Last week, market transactions began to struggle, and traders said they saw a surprisingly large gap in the prices offered by buyers and sellers.
"Despite the drudgery, the Fed's actions" have not yet reached a decisive role. Vishnu Varathan of Mizuho Bank said in a report. "The market may think that the Fed's response was panic, exacerbating its own concerns."
The yield on ten-year Treasury bonds fell to 0.73%, suggesting that investors are pouring into what is considered a safe investment.
As major economies expanded travel restrictions and closed more public facilities, the Fed took action to increase the cost of efforts to contain an outbreak that has infected nearly 170,000 people worldwide. Coronaviruses accounted for about half of them in December, but each of the other twelve countries has more than 1,000 cases.
The Bank of Japan also expanded asset purchases, injected funds into the economy, and promised to provide interest-free loans.
The Bank of Japan also announced plans to provide up to 8 trillion yen ($ 750) to companies facing cash tightening. Billion dollars) of interest-free, one-year loans.
Last week, other major authorities, including the European Central Bank and the Bank of England, also adopted stimulus measures.
As of 10 AM EST, the S & P 500 Index was down 9.6%. The Dow Jones Industrial Average fell 2,371 points, or 10.2%, to 20,814, and the Nasdaq fell 9.3%.
In a dazzling week, the Dow Jones Index fell more than 2,000 points twice, and volatility seems to be the new normal. It also hit its biggest increase ever-1,985 points on Friday. Last week's decline also confirmed the end of Wall Street's longest bull market, which has risen from the financial crisis and lasted for almost 11 years.
The leaders of the seven developed democracies will hold a conference call on Monday. European finance ministers are also discussing ways to help the economy continue to weather the effects of the chaos, as some countries in the region have announced stimulus plans, including guarantees for businesses and even personal wages.
For most people, coronavirus causes only mild or moderate symptoms, such as fever and cough, and mild illness, and can be recovered in about two weeks. However, serious illnesses, including pneumonia, can occur, especially in the elderly and people with health problems, in which case it can take up to six weeks to recover.
Experts predict that this damage will last for weeks or even months, or even months
Many investors expect the market to remain volatile until the number of new infections stops accelerating. They hope that the US government's large spending plan can promote economic development at the same time.
AP business writer Joe McDonald is from Beijing.
The Associated Press received support. Health and Science Reporting at the Howard Hughes Medical Institute's Department of Science Education. The AP is responsible for everything.
At https://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak
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