U.S. stocks continued tumbling Thursday, a day that did not see much in the way of new developments. This is a drastic change of sentiment from earlier in 2020, when stocks would melt upwards with nothing new known.
The S&P 500 fell 3.39%, while the other two major U.S. stock indexes fell more than 3% as well. Money rushed into the safe 10-year treasury bond, sending its yield down to a historic low of 0.91%, just on the heels of a 50 basis point Federal interest rate cut.
The coronavirus continues to threaten global growth, with no clarity on the eradication of the virus in sight. That’s driving fear and poor sentiment.
Many are also afraid that lowered interest rates from central banks around the globe won’t spur business investment and consumer spend very much even in the second half of the year, when people expect growth to resume.
The magnitude of stock prices losses is outsized compared to the norm. The same is true for up days in the market, which can see 4% gains on major indexes.
Some are quick to note that, when the trade war was in focus, the worst impacted companies — and therefore their stock prices — were economically sensitive or cyclical companies.
They couldn’t raise prices to protect profit margins on higher cost imports with much flexibility. But now, a consumer staples company, for example, which is defensive in nature, can’t do very much about a consumer that stays home and doesn’t shop in order to avoid the virus. Many stocks are seriously impacted.
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