By Ryan Chou
On Tuesday, March 10, the DOW Jones bull market officially ended. After 11 years of generally continuous growth with the DOW and S&P, both major stocks fell into an unfortunate bear market.
This shift to a bear market was quite sudden. In just a couple weeks spanning February 19 to March 12, the DOW Jones underwent a historic 8,201 point crash, or a nearly 28% drop down to 21,200 points. This included a 10% drop on Wednesday alone.
As for the S&P, it felt a comparable nearly 27% drop down to 2,480.64 points over the same one month period. This was coupled with a massive 9.45% crash on Thursday alone.
Given that the S&P and DOW Jones are significant indicators for the performance of the overall stock market, this is clearly not good news for investors. Not only that, but these crashes just threw the odds of a recession occurring in the United States over 50%.
So why did this happen? The same reason why schools, competitions, and parades are closing left and right: coronavirus (COVID-19).
And it wasn’t just airliner stocks that took big hits as one might expect, with airlines such as Boeing taking staggering drops as high as 55% over the last month. Almost across the board, companies in most industries are taking unprecedented hits in the stock market.
In the technological sector, Apple took a 15% hit over the course of just three days. Up until the end of January, when coronavirus began to proliferate much more, the stock had been consistently on the rise.
And Verizon took a 17.5% hit over a four month period, but their stock had begun declining towards the end of December before the virus began gaining notoriety, so its decline may not be entirely blameable on the virus.
As for Disney, they took one of the hugest hits outside the airliner and travel-derived stocks. The well-known company that entertains millions every year took a 37% pummel over just one month and closed at just 91.81 points on Thursday.
There have been measures that have been taken in an attempt to combat these losses, which include a huge $1.5 trillion injection into the market by the Federal Reserve in an attempt to restimulate some growth. But so far, the bear market continues.
The billionaires are feeling the impacts as well. After an impressive doubling in net worth from $20 billion to $40 billion at the start of this year, Musk has dipped down by about $6 billion to $34 billion. And as for Michael Bloomberg, who had also contributed over $500 million to his campaign and now anti-Donald Trump ads, his net worth has taken a staggering almost 15% hit from about $63 billion to $53.7 billion.
Forecasters have also dropped their predictions for the global economy performance. In the case of the OECD, their global prediction for 2020 dropped from 2.9% growth to 2.4%. As for China, the epicenter of coronavirus, their projection dropped from 5.7% to 4.9%, which is still a healthy but considerably slower pace of growth.
It doesn’t stop there. In the biggest drop since the Great Recession of 2008, oil prices took a massive hit by around 50% as a result of a combination of Russian-Iran price wars and the panic caused by coronavirus.
Hopefully, the stocks will straighten out and we will be able to divert away from a recession. But at the moment, an economic recession appears very plausible.