A slate of bad news related to the coronavirus drove stocks lower on Friday.
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Topline: Oil prices plunged again amid the ongoing price war between Saudi Arabia and Russia, while stock market losses accelerated after New York Governor Andrew Cuomo ordered 100% of the state’s workforce to stay at home due to the worsening coronavirus pandemic.
- The Dow Jones Industrial Average fell 4.6%, nearly 1,000 points, on Friday, while the S&P 500 dropped 4.3% and the Nasdaq Composite lost 3.8%.
- The Dow fell more than 15% this week—its worst week since the 2008 financial crisis (even worse than last week), while the S&P 500 has lost over 13% and the Nasdaq over 10%.
- Indeed, it has been an unprecedented week of market volatility, with massive daily swings in both directions: The CBOE Volatility Index, which gauges fear on Wall Street, posted its highest-ever close above 82 earlier this week.
- Despite posting slight gains at the open on Friday, stocks fell after a slate of coronavirus-related bad news: New York Governor Andrew Cuomo ordered 100% of the state’s workforce to stay at home, just a day after California Governor Gavin Newsom ordered a statewide ‘stay at home’ order.
- Oil prices fell to below $25 per barrel on Friday, as U.S. energy companies continue to face supply and demand pressure from the ongoing price war between Saudi Arabia and Russia, not to mention the coronavirus.
- President Trump on Friday also invoked the Defense Production Act of 1950, giving the federal government power to enlist private companies to produce much-needed medical supplies. Wall Street continues to eagerly await more progress on his administration’s $1 trillion coronavirus relief package, which is still under debate after being released by Senate Republicans on Thursday.
Big number: Goldman Sachs economists on Friday forecasted an unprecedented 24% hit to U.S. second-quarter GDP, following a 6% decline in the first-quarter, due to coronavirus. The bank also expects unemployment to surge to 9% and full-year GDP for 2020 to fall 3.8%.
Crucial statistic: “Every day this week, the S&P 500 Index traded in a range of at least 5% (the distance between the high of the day and the low of the day), a level of volatility we’ve seen in less than 1% of days since 1990,” according to Lindsey Bell, chief investment strategist for Ally Invest. She points out that while it’s hard to predict when the market will bottom out, “we believe it may be near.”
Crucial quote: “Investors are exhausted trying to grapple with enormous volatility and an avalanche of news, all the while working from makeshift setups in home offices due to coronavirus prevention measures,” according to Vital Knowledge founder Adam Crisafulli. “Sentiment couldn’t be worse fundamentally, with many thinking the S&P 500 has a few hundred more points of downside (at least) before hitting a sustainable bottom.”
What to watch for: “Another volatile trading week saw central banks globally ramp up stimulus efforts while governments inch their way closer in delivering economic support,” says Edward Moya, senior market analyst at Oanda. “The coronavirus pandemic is delivering a far worse economic impact than anyone imagined.”