Market Watch: Worst First Quarter Market Close in History
Wall Street closed the day with one of the worst first quarters ever, seeing the 11- year bull market come to an end as the world economy shuts down. Oil prices plunged, and interest rates sank in the month of March. Aggressive fiscal policy responses to the health crisis helped heal some of the damage; however, with death rates dramatically increasing across the United States and Europe, investors proceed with uncertainty and fear.
Aggressive policy adjustments amid uncertainty
At market close on Tuesday, The Dow Jones Industrial Average fell by 410 points, S&P 500 dropped 42.06 points, and NASDAQ down 74.05 points. The first Quarter of 2020 shows one of the worst markets investors have ever seen, warning markets to be cautious in Q2.
Here’s a snapshot of the First Quarter performance on Wall Street:
Dow: -23% change, worst since Q4 1987
S&P 500: -20% change, worst since Q4 2008
NASDAQ: -14.8% change, worst since Q4 2018
“Uncertainty around corporate earnings growth in the face of COVID-19, depressed oil prices and slowing the pace of global growth are among reasons to remain cautious in the near term,” said Terry Sandven, Chief Equity Strategist at U.S. Bank Wealth Management, according to MarketWatch.
COVID-19 has called for aggressive policy adjustments. Within the past month, America has seen several changes.
The coronavirus has caused the United States government to take aggressive federal action in the economic sector. Although markets have seen a slight rally in recent days, investors are still proceeding with uncertainty as they watch global markets fluctuate. Large corporations are asking for billions in response to their economic collapse, American Airlines recently filed for over $60 billion.
In retrospect, President Trump signed an $8.3 billion emergency spending fund in early March. The Federal Reserve announced its plans to inject $1.5 trillion into the country. President Trump waived all interest on federal student loans on March 13. Washington declared a state of emergency, making $50 billion available for care resources. The Federal Reserve also cut interest rates to zero and added $700 into asset purchases.
Breaking down the stimulus bill
Washington announced this week that they would be sending stimulus packages to individuals within the next three weeks. The stimulus bill includes student loan changes, aids those who filed for unemployment, retirement benefits, and more. Funds will be automatic for the most part, requiring the individual to not have to apply or send in records to receive aid.
According to the Wall Street Journal, individuals not paying taxes will need to submit a tax return to receive their funds in full. It will be a one-time payment of $1,200 for a majority of adults and range above and below this amount taking into account children and income per household.
The average college student will not receive this package, as a majority are listed as a dependent on their tax returns. This bill covers veterans, unemployed and eligible, along with U.S. citizens living abroad.
Those diagnosed with COVID-19 who suffered financially in the result will receive an additional benefit.
Fiscal policy is an essential strategy in the coronavirus economy, as the government adjusts spending and tax rates to influence a nation's wealth. The government can use its tools to create and import resources for the health emergency while accounting for those who suffered financially from state and federal safety rules surrounding the virus.
Shelter in place orders are tanking demand globally, as death rates skyrocket and cases surge, the U.S. market starts off the year at its worst change in history.
Job reports for March will be released this week, and the acceleration phase of the epidemic continues to dictate an ongoing fluctuating market.
Cover Photo: Pixabay