Chinanews client Beijing March 24th (Xie Yiguan) Nothing happened. The US stocks triggered a blowout on the previous two weeks on Monday. In order to prevent the third stage of "Black Monday", the Federal Reserve launched an unlimited QE on the 23rd Under strong stimulus, US stocks lost their contracts, but US stocks continued to fall.
On March 24, the Dow was trading intraday.
Dow and S & P 500 hit new lows since Trump took office
Before the opening of the US stock market, the Trump administration's $ 2 trillion fiscal stimulus bill failed in a key procedural vote in the Senate. Affected by this news, the US stock index futures on the 23rd triggered a meltdown.
Seeing that "Black Monday" is coming again, the Fed staged its "Neptune-style" guarding and introduced the most radical move-opening the door to unlimited quantitative easing (QE). After the news came out, the U.S. stock index futures once rose straight and rose.
However, as the two parties in Congress have not yet voted to pass economic stimulus and rescue plans, the three major US stock indexes opened lower. At the beginning of the session, the decline in US stocks further expanded.
During trading hours, according to US media reports, Senate Minority Leader Chuck Schumer said "we are very close to reaching an agreement." US stocks are now rising straight. But then the news that the stimulus bill failed to pass the barrier once again caused US stocks to continue to fall.
As of the close, the Dow and the S & P 500 reached new lows since President Trump took office in January 2017. The Dow fell 3.04% to 18591.93 points, down 582.05 points, a record low in nearly 40 months; the S & P 500 fell 2.93% to 2237.4 points, the lowest since December 2016; the Nasdaq fell 0.27% to 6686.67 points. Apple fell 2.12%, and its market value fell below the trillion dollar mark to $ 981.7 billion.
After the Federal Reserve announced unlimited easing, COMEX gold futures closed up 5.26% at 1566.3 US dollars per ounce on Monday, the largest single-day gain since 2009. International oil prices also rose collectively. US NYMEX crude oil futures closed up 5.08% at 23.78 US dollars / barrel, Brent crude oil futures rose 2.76% to 29.81 US dollars / barrel.
But the market's risk aversion is still there. Most US Treasury yields fell on Monday, and the US dollar index rose 0.05% to 102.4528 in late New York.
Data map: US Federal Reserve Chairman Powell. Photo by Shaoxing Ting, China News Agency
The Fed turned into "Neptune" to release water, why did US stocks still fall?
The Federal Reserve announced on the 23rd that it has adopted a wide range of new measures to support the economy and continue to purchase US Treasury bonds and mortgage-backed securities to support the smooth operation of the market. There is no upper limit, which is equivalent to an open quantitative easing policy. At the same time, the Fed also announced that it would expand the scale of money market liquidity facilities.
The Fed said it will buy $ 75 billion in Treasuries and $ 50 billion in institutional home mortgage-backed securities every day this week, with daily and regular repo rates quoted to be reset to 0%. At the same time, the Fed will begin to provide unprecedented credit support to households, small businesses, and major employers.
This is by far the most aggressive market intervention by the Federal Reserve since the outbreak of the new crown pneumonia outbreak in the United States.
Chris Rupkey, chief financial economist at MUFG Union Bank, said, "The Fed's policy is shifting to higher gears, trying to help support an economy that currently appears to be in free fall." "The central bank is changing its role and is no longer the last loan. People, but the last buyer. Don't ask how much they will buy, this is truly unlimited quantitative easing (QE). "
However, according to the US Consumer News and Business Channel (CNBC), Larry Kudlow, a White House economic adviser, said in an interview that corporate aid may follow the "Troubled Asset Assistance Program" (TARP) during the 2008 financial crisis. With "certain conditions".
Kudlow prefers taxpayers to take a share of these loans because the approach worked well 10 years ago. Kudlow also said that most of the assistance to the company will go through banks, and assistance to individuals (for example, $ 3,000 per family) will go through the IRS.
Zhang Jun, dean of the School of Economics at Fudan University, said that the financial market was panicking first, and the Fed had put out policies that hoped to stabilize it, but it may not be stable because the epidemic has not been controlled and is still developing. The development of the epidemic will cancel or slow down economic activities. It directly impacts GDP and causes economic growth, which in turn will have a greater impact on financial markets.
On March 12, local time, a masked citizen walked past the New York Stock Exchange. Photo by Liao Pan of China News Agency
Trump says U.S. will resume work soon, Wall Street expects U.S. stocks to fall
According to the latest data released by Johns Hopkins University on the 23rd, as of 14:30 EST on the 23rd (2:30 on the 24th Beijing time), the number of confirmed cases of new crown pneumonia in the United States rose to 41,511, with 499 deaths. example. New York State has the largest number of confirmed cases at 20,875; New Jersey has 2844 confirmed cases; Washington State has 1996 confirmed cases.
The Fed said in a statement that the measures were taken because the new crown pneumonia epidemic is causing great difficulties in the United States and the world. "It's become clear that our economy will face severe chaos." The public and private sectors must take proactive steps to limit losses to employment and income, and promote rapid economic recovery after the epidemic is brought under control.
On the 23rd, US President Trump repeatedly stated at press conferences held at the White House that the number of deaths caused by the damage to the US economy may be more than the number of deaths due to infection with the new crown virus. It said that it will use the data cautiously to make new measures and recommendations. Within 3-4 months, the United States will resume work and will not turn the virus into a long-term and persistent financial problem.
The rapid spread of the new crown virus almost brought the US public life to a standstill and brought US stocks from a record high into a bear market in a very short period of time. It took only 22 days for the S & P 500 to plunge 30% from its all-time high, surpassing the rate of decline during the Great Depression.
With the spread of the epidemic, many Wall Street investment banks predict that U.S. stocks will continue to fall. Goldman Sachs predicts that the decline in the S & P 500 from peak to trough may be 41%. Bank of America believes that the wave of selling may not ease until the S & P 500 reaches 1800. Credit Suisse predicts that the S & P 500 Index may fall by 35% as a whole. "During the SARS epidemic in 2003, the stock market bottomed out after a week of new infections peaked."
The world's two largest financial institutions also expect a recession in the global economy. The International Monetary Fund said the global recession this year is expected to be at least as severe as the recession during the financial crisis more than a decade ago, before the economy recovers in 2021.
The World Bank President Malpas pointed out that the world economy is expected to experience a severe recession, and the World Bank, including the International Finance Corporation and the Multilateral Investment Guarantee Agency, may deploy up to 150 billion US dollars in the next 15 months to fight the epidemic.
In this case, what other big steps are available for the Fed? If US stocks continue to fall in the future, Zhang Ming, director of the International Investment Research Office of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, does not rule out the possibility that the Fed will announce the next direct purchase of stock market ETFs, large blue chip stocks, or investable bonds. (Finish)