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The bears who thought that a U.S. market crash was coming have retreated as the markets recover slightly from Thursday’s onslaught. Further interventions by both the U.S. Government and the FED are also coming through.
The U.S. market crash that many bears are expecting will most likely not come through. This is because markets are recovering from this week’s massive losses. Sources say that the markets made massive recoveries after yesterday’s losses. The losses reportedly went on throughout the night. The opening bell but, reversed a part of them.
The S&P 500 reportedly traded at the opening bell with a 4% increase after yesterday’s 9.75% dip. The Dow was climbing also by about almost 1,000 points.
Thursday’s Decline Similar to the 1987 U.S. Market Crash
Thursday’s trading session was one of the worst trading Sessions in U.S. history. It was also reportedly the worst since the 1987 stock market crash. ” Black Monday” was one of the defining moments of the markets at that period and many came out of the markets bruised.
COVID-19 fears seemed to have ruled the markets as investors’ confidence was hampered by many factors.
The lack of an effective U.S. Federal government response to shore up the markets led to sharp declines. Across the board, Fear, uncertainty, and doubt (FUD) prevailed. International markets also followed suit as they too fell sharply.
In the interim, many fear that the markets are still multi-directional. Those behind this school of thought think that with so much uncertainty, the markets will experience volatility for a while.
They may have a point as the Dow is still up by less than 50% of yesterday’s highest points. The Dow itself is far from its February high by at least 28%.
The seeming absence of political will by the U.S. government has driven investors aground. This may change however as sources say that the U.S. Government is mulling broad market interventions.
The FED Comes to the Rescue
The FED has already pledged initial interventions of up to $1.5 trillion. The Fed’s promise to buy $35 billion worth of bonds has also calmed many frayed nerves.
Sources also report that Congress may be preparing a bill to deal with COVID-19 issues and emergencies. This will do much to soothe the markets. The markets are already reeling from global disruptions in value chains.
Different forms of Government and private stimulus will give investors the much-needed confidence to do what they do best: investing.
Governments on a global scale are putting their interventions in place as well. Italian and Spanish regulators stopped active shorts on certain equities. The Chinese government has indicated that it will inject about $75 billion into its economy. The European Union is not left behind as a halt to spending regulations by Governments is expected.
Thursday is reminiscent of the 2008 market crash. That singular crash ushered in the economic recession that nearly wiped out the economies of many countries.
If the U.S. Government does not get in front of the situation, we may be seeing a repeat of recent history. The effects of this time could be much deeper.