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MONDAY, BLOODY MONDAY
"I’ll take things that make me sh*t my pants for 3,000, Alex"
A: These are the stock indices that had their worst day ever, or since the Market Crash of 1987
Q: What is... all of them?
Spoiler alert: the unexpected stock rally on Friday the 13th didn't last. Despite the Fed performing an emergency rate cut to near 0% over the weekend, all three major indices tumbled on Monday.
The Dow dropped nearly 3k points, or 12.93%, suffering its third worst day ever, and worst since 1987. Standard & Poor’s index dropped 11.98% to its lowest level since December 2018, and the Nasdaq had its largest one-day drop ever, losing 12.38% on the day. So your Monday could have been worse.
It appears that coronavirus has become Thanos, uniting all of the market’s biggest risks to destroy the financial system and start anew. Sure, the Fed lowered rates to make borrowing money more attractive, but it’s still too risky for businesses to make any investments until the number of new cases starts to slow.
POTUS made another announcement today applauding the rate cut but acknowledged that the economy could still be headed into a recession. Donny Downer's biggest takeaway was a commitment to back airlines' request for a $50B aid package.
The package looks to include a combination of aid and access to loans in order to help airlines combat the refunds and lack of demand for flights. On a positive note, you can get a $42 round trip ticket to West Palm Beach right now!
The bottom line...
There is so much information, and disinformation, about the markets right now, that the only certainty is volatility. Case in point: the CBOE Volatility Index closed yesterday at its highest price ever, $82.69.
The reason? Well, investors have not been able to get a hold on the true market impact of this pandemic. Throw in the oil war and a struggling global economy, and you've got yourself a volatility cocktail worthy of a frat party mixer.
But some are pointing the finger at something else altogether: technology. Specifically, algorithms. Ok, boomer! Stock trading has become systematic on the institutional level. Trades are executed based on price ranges and market indicators that tell programs to buy and sell which some believe leads to greater volatility.
They probably aren't wrong. There have been ten separate days when the Dow has gained or lost over 1k points already this year. And until the coronavirus chill TF out, it's likely going to stay that way. Don't look now, but Dow Futures are up 600 points as of this writing.
Dow drops nearly 3,000 points, as coronavirus collapse continues [CNBC]
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