The Stock Market Responds to the Fears of the Second Wave of Coronavirus

The stock market tailspin came on Thursday as concerns about the second wave of coronavirus cases mounted.

stock market second wave of coronavirus
The stock market had its worst day since the first US case of COVID-19 was discovered in March. PHOTO/SHUTTERSTOCK

The stock market responds to the second wave of coronavirus: The stock market had its worst day since the first US case of COVID-19 was discovered in March.

Stock Market tailspin came on Thursday as concerns about the second wave of coronavirus cases mounted and the Federal Reserve predicted an unsolvable economic outlook.

Markets take a dip

The Dow and the S&P 500 both took a nosedive just weeks after it was reportedly returning a new leaf to the market. The Dow Jones industrial average fell 1,900 points, 6.9%, and S&P fell 5.9%. There has not been a single day fall of this magnitude since the Coronavirus locks began when the market collapsed on March 23. 

While both indices were still significantly higher than they were at the time, this fall was still a punch for optimistic investors, and in the weeks following, the market began its rebound.

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The CBOE volatility index, a measure of investor uncertainty, rose sharply on Thursday, rising 47% – the highest point in a month. However, not everyone was blindfolded by Thursday’s watering down. Many were already aware that the relative peace of the markets would not last in the face of national upheaval.

What is the reason?

Here are some of the factors that caused Thursday’s fall.

First, there is the fear that the second wave of coronavirus is beginning to take effect as states reopen. Several regions of the United States have eagerly waived orders to stay home, following protests to end locks and public calls to reopen the economy. 

Every state in the country has now somewhat relaxed its restrictions, allowing only a few restaurants and bartenders to dine, and shop in stores with some mandate on the use of masks.

But in just a few weeks, 21 states have seen an increase in new coronavirus cases, Reuters reported.

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It is now clear that the epidemic is not over, and investors who have bought stocks that rely on an uncontrolled economy are now dumping them as fast as possible. There was a huge sale of aircraft, shipping and retail stocks. 

In the wake of a growing number of lawsuits, many investors have turned their money back to companies like Zoom, Netflix and Peloton, all of which specialize in-home amenities.

Critical news from the central bank

Thursday’s mass sale was also a response to the Federal Reserve’s encouraging announcement.

On Wednesday, the US central bank said the economy was unlikely to return. The Fed predicted that unemployment rates would remain high for at least a few years and that the Fed would keep interest rates at zero until 2022. 

The Fed’s lack of confidence in the future of the economy has made Wall Street miserable.

Uncertainty seems to be the common thread between the severe coronavirus forecast and the Fed’s dark economic outlook. No one knows when, or how strong, the second wave of COVID-19 will be, and experts cannot say for sure how long the economy will recover. 

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If the stock market is anything to hate, it is uncertain.


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