US stock markets swung wildly between gains and losses on Friday. The Dow Jones Industrial Average rose as much as 300 points at the start of trading, before falling into negative territory, only to rise and fall once again.
The Dow, which was on pace for its biggest one-week drop since October 2008, is trading below the 20,000 level. The S&P 500, an index comprised of America’s top 500 corporations, was losing over one and a half percent. The tech-heavy Nasdaq Composite is down less than one percent.
The relentless selling seen in the markets is due to investor pessimism over the coronavirus impact on the global economy. The US Federal Reserve announced record-level stimulus measures this week. However, it has not relieved investors’ fears.
“Market volatility will persist until the government — fiscal or monetary — provides a backstop to stressed corporates and small & medium businesses,” New York Life Investments’ Lauren Goodwin told CNBC. “Support of those functions is vital to ensuring the economic disruption of Covid-19, though severe, is temporary,” she added.
According to Sal Bruno, chief investment officer at IndexIQ, ”The markets are trading more on emotion than the actual data” and that is “what’s causing the volatility.”
European and Asia-Pacific markets enjoyed strong gains on Friday. Global markets rebounded after banks and governments have pledged masses of cash to reduce the economic impact of the coronavirus pandemic.
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