Dow Jones Lost 900 Points on Thursday while Coronavirus Is Spreading in U.S.

UTC by Bhushan Akolkar · 3 min read
Dow Jones Lost 900 Points on Thursday while Coronavirus Is Spreading in U.S.
Photo: Depositphotos

The COVID-19 spread continues to cast a larger shadow on the global markets as volatility seeps in. Analysts say that corrective measures by the Fed are doing little to control the market fall. Dow seriously dropped on Thursday.

On Thursday, March 5, Dow Jones tanked 900 points giving a close above 26,100 levels. The markets have stayed quite unpredictable for the whole week oscillating to-and-fro.

Since this Monday, Dow Jones has been moving 100 points up and down every alternate day. The market volatility continues on the fears of the fast-spreading Coronavirus. While government agencies have been working to allay the virus spread, no concrete solution appears at this stage.

Along with Dow Jones, the S&P 500 and Nasdaq Composite also crashed over 3% on Thursday. The rising cases of the Coronavirus across the globe have gripped the global economy with fear. Major states in the U.S. like California and New York are showing signs of an emergency.

Recently, the Trump Administration has given a massive order to industrial giant 3M Co (NYSE: MMM) to supply 35 million N95 masks every month, urgently. 3M has said that it is receiving orders from all across the globe and its manufacturing units are working at full capacity. Speaking to CNBC, Tom Essaye, founder of the Sevens Report, said:

“The majority of this is just growing concern about the fallout from the virus because it’s spreading. For every hour, another group of people have it and it’s in another state. People are getting a bit nervous about this constant barrage of headlines.”

Banking Stocks Crash

With the markets going topsy-turvy, investors are now fleeing to safer assets like Treasury bonds and bonds. Moreover, the pressure is clearly visible in the banking sector. On Thursday, the financial sector crashed at 4.9%.

Shares of JPMorgan Chase & Co (NYSE: JMP) dropped 4.9% and Bank of America Corp (NYSE: BAC) slid 5.1%. Sam Stovall, chief investment strategist at CFRA Research, said:

“People are trying to test out a bottom, trying to decide was last Friday the bottom, at least in the near term, for this move or is there more downside ahead”.

Earlier on Wednesday, the markets rejoiced on the news of Joe Biden’s win. However, this was very short-lived as virus spread fears continue to hold markets on tenterhooks. Mike Loewengart, managing director of investment strategy at E-Trade, said:

“The optimism coming off Super Tuesday has come and gone and we reverted to being driven by fear over the containment of the virus and the impact it’s going to have on the global economy down the road”.

Federal Reserve’s emergency rate cuts on Tuesday have had a little impact to allay market concerns.

“Despite the rally in stocks [Wednesday], Treasury yields and gold prices did not respond in-kind. None of the other markets saw the kinds of moves yesterday that would indicate that we’re out of the woods on the negative impact of the coronavirus. In other words, many other markets are still sending up warning signals,” said Matt Maley, the chief market strategist at Miller Tabak.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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