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#1 25-03-2020 15:19:14

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2840

US markets stimulated by Senate recovery plan agreement

US markets stimulated by Senate recovery plan agreement

Tuesday was another volatile day for trading. However, the news that Trump and the U.S. Senate approved a stimulus bill helped boost market confidence. The bill provides nearly $2 trillion as part of a concerted efforts to overcome the virus market crisis.

Thanks to this crucial agreement, several markets have recovered, starting with the Dow Jones, which recorded its largest one-day rise since 1933, with an increase of over 2000 points. The S&P500 index also rose from 2245 to 2426, its highest level in one day, following this news. Although we have seen the bull rally, the question remains: will it be enough to help the markets return to some normality?

Will this rally alleviate the market's concern?

The decision comes as New York is now becoming the epicenter of the virus situation, now reporting over 24,000 cases, with 209 deaths confirmed so far. This means that this state has more cases than the UK as a whole, with 7,500 confirmed cases so far. In the United States as a whole, there are 56,000 cases. The main contributors are: New Jersey with 3,666 cases, California with 2598 cases, Washington with 2,611 cases, and Illinois and Michigan with around 1,450 cases each. All of these cases arrived before the "peak" that many reports suggest could occur within the next 2 weeks.

Thus, even though the United States has demonstrated a strong fiscal commitment to help all companies affected economically, many believe that little has been done in other areas to stem the bleeding. The proverbial hemorrhage has claimed over 750 lives, a significant number, and if that number and the number of people infected increases, we could see the markets begin to panic once again because it could be clear that no amount of dollars would be enough to prevent the loss of life.

The market's reaction to the virus panic

By the end of the week, many are asking the question: what will happen next? Will Tuesday's bull market extend through Friday, or will the current downward pressure in the market create new opportunities for selling at a loss, as shown in this chart?

As of now, it appears that the market is trying to consolidate. The US indices have historically shown that they can be a solid long-term bet. Thus, as the markets have fallen, many have simply seen this as an opportunity. An opportunity to enter at a lower price or, for those who have already lost big, to double down on their investments in order to strengthen their holdings with a lower average buy price.

Regardless of this, the next few days will be crucial to see how much the United States has really suffered from this crisis. Current projections show that infection rates are doubling every 4 days. This means that we could reach close to 150,000 Coronavirus cases by April 1 in the U.S.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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