Free Fall of the US Stock Market
New York, 12th June: With tens of thousands of Americas dying due to COVID-19 Pandemic and mass protests in the US cities, the US stock markets have come to face the reality.
According to Baaghi TV report, the US stock market appears to be facing reality after weeks of climbing amid mass unemployment, pandemic crisis, and protests across the country.
According to Foreign Policy (FP), two factors seem to be driving the dive: a less than the optimistic economic outlook from Fed Chairman Jerome Powell on Wednesday and a realization that the easing of lockdowns may have been premature.
On a day when the S&P 500 dropped 5.9 percent, the VIX, known as Wall Street’s “fear gauge” climbed by approximately 50 percent to over $41, a level not seen since late April. Prior to Thursday’s dip, the S&P was on course to rapidly erase all its losses from 2020.
How come it took so long?
On May 29, Foreign Policy asked leading experts why the market rallied even as the world crumbled? Although it may be obvious to those outside the financial world that things are not looking good, the stock market is not always primed to focus on the present.
Many investors still see the world “through pre-pandemic-tinted lenses.”
Diane Swonk, the chief economist at Grant Thornton said. “They take previous recessions as a benchmark and expect profits to rebound as in the past—and don’t see the much larger and longer-term challenges created by COVID-19, including our need to maintain social distancing in the future.”
America’s policy to De-populate the Third World
It’s all about the Fed. Eduardo Porter, an economics reporter at the New York Times, is a little more blunt, highlighting the newfound clout of the U.S. central bank.
“Wall Street types like to believe that the price of the stocks they peddle somehow represents the value of a business or the state of the economy. Nonsense,” he said. “These days, the price of stocks has mostly been a function of policy at the US Federal Reserve: When the Fed unleashes waves of money on the economy, that money seeks assets to buy.”
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