The stock market has suffered some of its biggest drops yet since coronavirus became a problem. The major markets have reached the lowest point that they have seen since 1987. The sudden drop seems to have occurred despite what the Fed did Sunday in an attempt to prevent this from happening.
The SEC Says Stay Open
The Chair of the Securities and Exchange Commission (SEC), Jay Clayton, told the markets that they should continue to function. A potential shutoff of the stock market may be the next step taken to try and prevent an ongoing sell-off that is sure to continue in light of current losses. Shutting the stock market down for a few days has not been ruled out. It has happened before.
The Feds’ Action
On Sunday, the Fed suddenly lowered the interest rates down to 0. This was unexpected and was not decided upon during a regularly scheduled meeting. Along with the decision, came a promised $800 billion to be poured into the economy through the purchase of Treasury Notes and various asset purchases.
Treasury Notes have also suffered with the stock market. The 10-year Treasury note today had reached a high of 0.858% before finishing the day at 0.73%.
The Oil Industry
Oil prices in the U.S. have also dropped. The low demand for fuel of all types because of coronavirus has driven oil prices even lower. The price war between Russia and OPEC continues to keep prices low. WTI dropped below $30 per barrel, at a loss of 2.61%, now at 29.44. The low point for the past year was $27.34. As bars and restaurants close, demand will continue lower.
Travel between countries continues to be restricted. Canada has shut its border to the United States, but Mexico on the southern border claims that it is too poor to close the doors to the U.S.
Airlines are currently struggling to survive because of the travel restrictions taking place around the world. This has resulted in the airline industry asking for a bailout of $50 billion.
A Warning from Goldman Sachs
In other news, Goldman Sachs warned that the S&P 500 could drop down to 2,000 this summer (currently 2,529). By the end of the year, however, they expect the stock market to recover.
It continues to look like the stock market is not going to pick up anytime soon. Recovery is likely to occur, though, once coronavirus has passed and the doors for travel are open and businesses can operate as usual.