U.S. Stock Market Plunges Into Correction as Goldman Sachs Predicts Further Drop
February 27, 2020 @ 21:01 UTC
The U.S. stock market is being terrorized by the coronavirus. The Dow Jones Industrial Average fell by almost 1,000 on Thursday morning. Sitting at around 26,000, the plunge marked a 12% drop since the Dow’s 52-week high of 29,551 in early February. Technically, this means the Dow has formally entered a market correction, as has the Nasdaq. And given that Goldman Sachs is now predicting further falls up until at least the second half of the year, 2020 is shaping up to be a lost year for American and global economic growth.
It’s no surprise that the U.S. stock market has again been spooked by the coronavirus. On Wednesday, President Trump went so far as to declare that America is doing a great job of containing the virus. Understandably, investors regarded this declaration as a tell-tale sign that the virus has scared the White House. Hence, the Dow dropped by around 300 points Wednesday before tumbling almost 1,000 points at Thursday’s open. Since a “correction” is usually defined as a decline of 10% from a recent high, the Dow Jones officially meets that definition.
The Dow wasn’t the only American stock market to begin a correction Thursday. The Nasdaq Composite also completed a 10% decline from a recent high. It fell by over 200 points at opening, hitting a bottom of 8,626. As with the Dow, this represents a 12% fall from the recent record high. So yes, the market has effectively decided that recent highs were based on false premises. Having seen the government’s counter-productive attempts to quell coronavirus fears, and having seen an usual “domestic” case of the virus in California, investors now believe the situation is much worse than first thought.
Market analysts and financial services companies agree that the stock market is set for even more pain. On Thursday, Goldman Sachs predicted that the S&P 500 is likely to fall to 2,900 in the next few days. In other words, it will also enter a 10% correction from its recent high of 3,386.
U.S. Stock Market Plunges Into Correction as Goldman Sachs Predicts Further Drop, CCN, Feb 27