On Friday, the Dow gain registered a historical record, following three consecutive days of point declines, making president Donald Trump exalt over this on social media.
On Saturday morning, referencing to the Friday surge by the Dow Jones Industrial Average of 9.36%, the S&P500 index of 9.28% and the Nasdaq Composite of 9.34%, he wrote “BIGGEST STOCK MARKET RISE IN HISTORY YESTERDAY” on his Twitter account.
Just a sign of getting back on track
Indeed the Dow gain was the largest ever on a point basis, but it’s important to mention that the rally in stocks Donald Trump mentioned was actually a sign of recovery after the losses suffered throughout the week when the market registered significant losses.
Right now, the Dow is down about 20% from its all-time high, which puts it in a bear market.
“Investor psychology only is clear in hindsight, but we can all agree that panic infiltrated various aspects of our lives the last few days,” revealed Frank Capelleri, executive director at Instinet.
COVID-19, the obvious catalyst
Of course, it’s clear that all these movements on the stock market have been caused by COVID-19, the infectious disease currently spreading all over the world. The United States is no exception and, after Donald Trump declared a national emergency on Friday, offering access to $50 billion in funding to combat the pandemic, the market reacted.
However, focusing on Friday’s results is not recommended, considering the backdrop of the week’s otherwise turbulent nature.
Finally, the past week was also marked by a seize from the Treasury market of over $15 trillion, which ended up with the Federal Reserve intervening. The central bank took a few steps to step the “unusual disruptions” in the market for the debt registered by the US government, by injecting a total amount of $1.5 trillion into Wall Street’s key funding markets.