NY Stock Record Plummets Fed Suggests Rate Cut May Again This Month 5:08 on March 2
The spread of the new coronavirus has caused the New York Stock Exchange to drop record prices last week since the Lehman Shock. In an effort to curb market volatility, the Fed, the central bank of the United States, has signaled a possible cut this month.
In the New York Stock Market, the Dow Jones average weekly price declined more than $ 3,500 a week, more than 12% in the past week, following the Lehman shock in 2008, due to the discovery of patients in the United States who do not know the route of transmission of the new coronavirus. It has been a record drop since then.
Last week on Wednesday, Fed Chairman Powell issued an urgent statement to mitigate financial market turmoil, signaling that a move to cut interest rates this month could be made "to take appropriate action to support the economy."
However, if infections are widespread on the 29th in the U.S., with the first deaths being confirmed, and if stock prices continue to decline this week, the market awaits a regular meeting to determine monetary policy starting this month. Instead, there may be increasing demand for urgent interest rate cuts.
The Fed has been holding interest rates unchanged since December last year, stating that the economy is continuing to expand, but the decline in stock prices has been conspicuous in manufacturing and other industries that procure parts from around the world, and has been a driving force in the global economy. Concerns about the US economy have grown rapidly.
U.S. company outsources production to Chinese factory
The spread of the new coronavirus is affecting not only stock prices, but also the activities of companies in the United States.
An audio equipment manufacturer with approximately 30 employees, located in Boston, Massachusetts, has outsourced production to a factory in China to reduce production costs.
In addition, all products, such as speakers, are sold under their own brand in the United States, Europe and Asia.
However, due to the spread of the new coronavirus infection, factories in China have stopped operating, and have been unable to produce products approximately one month ago.
According to the company, the inventory of goods will reach the bottom in a few weeks, and if the production does not return by the middle of this month, there will be no products to sell.
A few days ago, a sales agent in Italy, where the number of people infected with the new coronavirus is increasing, canceled the order as `` I can not see the future, '' and also planned to participate in Europe to expand the sales channel Even if production resumes, there are concerns about the impact on business, such as the cancellation of trade fairs held in Japan.
According to Tom Devest, the company's representative, "current production is" zero. "It is devastating and unpredictable how long this effect will last. I'm in daily contact with factories, peers and customers. The situation is getting worse day by day without knowing what to do with the situation. "
A study by the Wall Street Journal, a major US economic media, reported that the outbreak of corporate activity caused by the new coronavirus could reduce the US GDP from January to March by less than 0.5%. However, there are concerns about the impact on the real economy in the future.