Wall Street and Main Street on watch to see if Trump gains erased

US stocks open lower, signalling more losses ahead after Dow closed below 20,000 for first time since Feb 2017.

Wall Street will Dow erase Trump bump
People invested in the stock market - and even those who are not - will be watching the Dow closely on Thursday to see if it closes below a level that eradicates the entirety of the so-called 'Trump Bump' [File: Lucas Jackson/Reuters]

United States stocks drafted lower then higher on Thursday, following Wednesday’s session that saw the Dow Jones Industrial Average close below 20,000 for the first time since February 2017 – a hair’s breadth from erasing all of its gains since President Donald Trump took office.

Trump has touted the performance of the Dow throughout his presidency, taking credit for the economy’s continued expansion – now in its 11th year – and for the stock market marking new record highs. But what goes up, coronavirus fear is bringing down with a vengeance.

The Dow Jones Industrial Average extended its losses in early morning trading, but reversed course to push into positive territory, then settled into a choppy trade. The index was up 183 points or just shy of 1 percent around 13:00 ET.

The S&P 500 – a barometer of the health of US retirement and college savings accounts -also opened lower and climbed back into positive territory. It was up around 0.6 percent in afternoon trading in New York. 

The Nasdaq Composite Index also fell at the open, but rebounded to hold its gains. The tech heavy index was 2.7 percent around 13:00 ET. 

The coronavirus outbreak has already brought the US stock market’s 11-year bull run to a screeching halt. Uncertainty is the order of the day as the pandemic disrupts entire sectors of the economy, and businesses great and small. Each new batch of daily headlines announcing temporary factory closures, layoffs and pleas for government bailouts from corporate America sends analysts scrambling to adjust their forecasts for the US and global economies.

The ‘R’ word – recession – is now a common feature of analyst notes.

Emergency moves by the US Federal Reserve – from slashing interest rates to near zero to successive crisis-era measures to shore up the economy and stop credit markets from freezing up – have failed to meaningfully stem, let alone reverse the stock market rout. 

And it is not just stocks that have suffered. While Thursday prices rebound somewhat – bonds, oil, gold and bitcoin have all been hammered in recent days as investors and businesses scramble to get their hands on cash to ride out the coronavirus storm.

The problem is – no one knows when the storm will pass or the extent of economic damage it will leave in its wake. 

Washington just enacted legislation for $100bn in aid to help with the coronavirus outbreak, while the White House has unveiled details of a $1.3 trillion stimulus plan. 

But fiscal stimulus measures and talk of more to come have so far failed to dig stocks out of the deep chasm opened by mounting anxiety over coronavirus fallout. 

As markets have been thrown into turmoil, the gloom has spread rapidly from Wall Street to Main Street. Even those who do not have money in the markets – so-called “skin in the game” – are increasingly worried about how coronavirus could derail their financial lives.

Though the S&P 500 is a broader index and therefore a more accurate gauge for assessing the health of publicly traded US companies, the 30-share Dow is the index that is most well-known and therefore arguably carries the most psychological weight with the general public.

People invested in the stock market – and even those who are not – will be watching the Dow closely to see if it closes below a level that eradicates the entirety of the so-called “Trump Bump”.

Source: Al Jazeera