Tuesday’s rally did not last long. Early on Wednesday, U.S. stock futures, including Dow, fell sharply. Tech stocks have also suffered.After the coronavirus outbreak, the market has become as volatile as never before. Yesterday, it rebounded after the crash on Monday, but it was not out of the woods yet. Today, U.S. stock futures dropped sharply, suggesting more volatility when trading began Wednesday, following two roller-coaster days on Wall Street. Dow Futures slide 700 points, rolling back from Tuesday’s upward movement. S&P 500 futures plummet by 1.98% after the best one-day performance. Finally, Nasdaq 100 futures lose 1.95%.Let us trace how the market has come to this.Monday started with a real mess on the market. After a massive sell-off on Sunday caused by oil prices plunge,
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Tuesday’s rally did not last long. Early on Wednesday, U.S. stock futures, including Dow, fell sharply. Tech stocks have also suffered.
After the coronavirus outbreak, the market has become as volatile as never before. Yesterday, it rebounded after the crash on Monday, but it was not out of the woods yet. Today, U.S. stock futures dropped sharply, suggesting more volatility when trading began Wednesday, following two roller-coaster days on Wall Street. Dow Futures slide 700 points, rolling back from Tuesday’s upward movement. S&P 500 futures plummet by 1.98% after the best one-day performance. Finally, Nasdaq 100 futures lose 1.95%.
Let us trace how the market has come to this.
Monday started with a real mess on the market. After a massive sell-off on Sunday caused by oil prices plunge, markets did not recover. Prices of Bitcoin, Ethereum, Litecoin, XRP dropped, stocks also tanked. Market indexes have taken traders aback as well. Dow Jones crashed 2000 points in a single day, its biggest crash since the 2008 financial crisis. The S&P 500 and Nasdaq also dropped 7% on Monday. There was a huge panic in the market resulting in stocks falling from the roof.
On Tuesday, the panic was replaced by gladness. The Dow Jones Industrial Average rose by 1,167.14 points, or 4.9%, at 25,105.14. Further, the S&P 500 jumped by 135.67 points, or 4.9% to close at 2,882.23. Besides, the Nasdaq Composite Index gained 393.58 points, or 5%, to 8,344.25. Facebook Inc (NASDAQ: FB), Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX) and Google-parent Alphabet Inc (NASDAQ: GOOGL) also surged over 5% yesterday. Tech shares flashed a bullish signal Tuesday amid the coronavirus stock market correction. As a result of this positive trend, Tuesday became a much-needed relief rally for the investors.
According to experts, the lift resulted from Donald Trump‘s calling for measures to help businesses deal with the economic slowdown resulting from the coronavirus. In particular, he suggested a payroll-tax relief for the rest of this year.
Bad Wednesday Follows Tuesday’s Rally
The rally did not last long. Early on Wednesday, U.S. stock futures fell sharply. Dow Futures slide 762.16 points at the open, S&P 500 futures start at 2717.4, while Nasdaq 100 futures are 1.95% down.
Willie Delwiche, an investment strategist at Baird, stated:
“Stocks posted impressive headline gains, but more strength needs to be seen beneath the surface to have confidence that the downside momentum in stocks has been broken. The weight of the evidence continues to argue for caution in the near term and we recommend that investors remain patient in the face of ongoing market volatility.”
As Joe Kalish, chief global macro strategist at Ned Davis Research, the payroll-tax plan is not enough to rescue the economy.
“We need to see meaningful support for economic activity and credit backstops, especially for small businesses, not a targeted approach executed only by the executive branch. We will likely need congressional involvement. This is a potential solvency problem.”
At least, it is not enough to rescue the market. It is a big challenge not only for the U.S. but also for other countries to create some stability, and policymakers definitely have to step in more forcefully.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.