On Monday, March 16, Wall Street suffered a 12% drop in its S&P 500 index, which prompted the government to set up quick economic interventions.
To overcome the COVID-19 health crisis, US President Donald Trump issued a stimulus package, promising financial aid to the U.S. economy worth US$1 trillion [AU$1.7 trillion] in order to keep things going amid the pandemic. This comes with a series of direct payments to all Americans starting as early as April 6.
Earlier this week on March 15, the Federal Reserve also decided to cut interest rates to zero percent to curb the economic impact of the recent health crisis.
However, despite all this, the Dow Jones index continues to drop.
At the time of writing, NYSE has dropped points to -1,869.01 and the S&P 500 has plunged to 8.5% in afternoon trading. The Dow Jones Industrial Average has fallen 2,018 points to 19,353, whereas Nasdaq’s total decline has been 7.2% in the past 24 hours trading time.
The U.S. market plunge has had a massive impact on the Asian stock market. Recent stock indexes in Asia also closed heavily in red, indicating a bearish trend:
The recent 12% drop in its S&P 500 index heralds a warning that a recession is likely to be imminent. Trump expressed his concerns about this, claiming that the US “may suffer a recession.”
However, according to experts, the US is indeed already in recession.
Former director of the U.S. National Economic Council Gary Cohn and economist Alan Blinder both believe that the United States is already in recession. Economists from Bank of America also share the Cohn’s and Blinder’s sentiments. In a statement, economist Michelle Meyer said:
“We believe that the US economy has fallen into recession, joining the rest of the world, and it is a deep plunge [. . .] The salvation will come if there is a targeted and aggressive policy response to offset the loss of economic activity and ensure a sound financial system.”
As the coronavirus has swiftly taken across the globe, businesses have started to temporarily shut down.
The global economy has faced a major setback. Analysts are predicting stock markets to further follow the bearish trend as things may get worse in days to come.
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