Following the official declaration of the coronavirus as a pandemic, Monday witnessed a significant stock market crash reminiscent of the historic “Black Monday” crash in 1987. The Dow Jones Industrial Average plummeted by almost 3,000 points, representing a 13% decrease, setting a new record for the largest single-day drop in American stock market history, surpassing recent record lows.
Despite the severity of the situation, the market is displaying resilience. On Tuesday morning, the Dow made a modest recovery, opening with a gain of 400 points and seeing another 200-point increase during late-morning trading. Similarly, the S&P 500 index saw a slight uptick of 2.7%.
Businesses are facing challenging times as the coronavirus prompts US citizens to practice social distancing measures, leading to declining customer bases across various industries. Sectors such as airlines, restaurants, and movie theaters are particularly hard hit as people avoid public gatherings. There are concerns over a potential recession looming over the US economy, prompting the Federal Reserve to implement significant interest rate cuts, virtually reaching zero, to support the banking system.
Conversely, hopes of a targeted economic stimulus package from the Trump administration injected optimism into the market on Tuesday. The White House is anticipated to introduce an $850 billion relief package to alleviate the economic impact of the coronavirus, with a dedicated $50 billion allocation earmarked specifically for the struggling airline industry.
