If US stocks move from market adjustment to bear market, it will be another situation. Since the Second World War, the U.S. stock market has experienced 12 bear markets, with an average stock index decline of 32.5%. The most recent bear market in US stock market occurred in October 2007 March 2009. The stock market fell 57% and recovered four years later. Historically, the average duration of the bear market in the US stock market is 14.5 months, which takes an average of 2 years to recover.
This time, Wall Street is a little pessimistic
A novel coronavirus outbreak has occurred overseas. At least 49 countries have reported the first case. The United States and Germany have already produced cases that are not traceable, complicating efforts to track the virus, isolate infected people and prevent its further spread. Affected by the epidemic, American cinemas were closed and Hollywood film production was suspended.
Goldman Sachs said in a report on Thursday local time that US companies will have zero profit growth in 2020. Meanwhile, the novel coronavirus will spread more widely, the US and the global economy will face high uncertainty this time. The longer the outbreak of the epidemic, the more serious the US economy will suffer.
Goldman Sachs therefore forecast a 13% drop in earnings for the S & P 500. Microsoft, Budweiser and apple all said the outbreak of the new coronavirus had disrupted some of their businesses.
Its clearly a massacre, said David barnsen, chief investment officer of wealth management firm Bahnsen group. When you go into free fall mode, there is really nothing you can do but wait. .
The VIX panic index soared, and the market panic was close to the extreme level.
Cancellation or postponement of a number of international industry exchange meetings
Facebook canceled the annual F8 Developers Conference, which was scheduled to be held in May.
Microsoft, Sony, Facebook, unity and other companies announced to withdraw from the GDC Game Developers Conference in mid March this year.
The world mobile communication conference (MWC), which was originally scheduled to be held from February 24 to 27, was cancelled. It is the largest mobile communication trade exhibition in the world, and a grand event for Huawei, Samsung, Qualcomm and other communication giants to show the latest achievements to the world.
Milan Furniture Exhibition, the largest furniture exhibition in the world, which was scheduled to be held from April 21 to 26, was postponed to June this year.
Both Beijing and Shanghai fashion weeks, originally scheduled for the end of March, have been postponed. Meanwhile, a large number of Chinese fashion brands quit Paris and Milan fashion week.
In addition, a number of sports events and concerts have been cancelled, and the global large-scale economic exchanges have almost pressed the pause button.
Wall Streets response
In the face of high uncertainty, the views of the worlds most mature investors are worth reference.
1u3001 Bet on emerging markets, especially Chinas stock market, to move out of the independent market.
According to a media survey of 18 traders, strategists and fund managers (from Citigroup, UBS, Deutsche Bank, BNP Paribas and so on), the most popular currency at present is the Indonesian rupee, while the most desired stock market and bond market are Chinas A-share and bond markets.
The novel coronavirus panic is expected to recede in the second quarter, and economic activity is expected to stabilize in the same period, and the economy may also recover synchronously, TetsuyaYamaguchi, chief technology analyst at FujitomiCo., said. Central banks in emerging markets have the ability to choose whether to lower interest rates further or remain unchanged, but overall global interest rates are expected to remain low.
Chinas Chinas very fruitful novel coronavirus is also a short-term economic stimulus policy for investors in Wall Street, according to the survey.
2u3001 Wait for the fed to cut interest rates.
According to CME Group data, federal fund futures used by traders to bet on the Feds policy path showed on Thursday local time that investors believe the possibility of the Fed cutting key interest rates at its meeting from March 17 to March 18 is 72%, and the possibility of free 9% a week ago. Investors also believe that the probability of the Fed cutting at least a total of 50bp by the end of July is 83% and the probability of 75bp is 46%.
But on the Fed side, theres a lot of talk.. The vice chairman of the Federal Reserve and the chairman of the Minneapolis fed all said that there is no need for urgent action until more information is available..
According to the Feds adjustment in recent years, it seems impossible to cut interest rates in March. The question is how much interest rate cuts will stimulate the U.S. economy. Many analysts question that low interest rates are usually good for the capital market, but not for the real economy.
But as long as the Fed cuts rates, Wall Street wont panic.
3u3001 Waiting for bottom reading.
Alicia Levine, chief economist at bny Mellon, said: if you think its just a short-term event affecting economic growth, it will disappear in the summer. Now its OK to enter the market. But if you think its not that simple, you need to watch it carefully.
Basically, the novel coronavirus will end in the summer, and the growth of the economy will pick up again, and the latest trends will be carefully observed, AliciaLevine said. The advice for most investors, she said, is that waiting is insurance. If there is profit, you can choose to put it in the bag as a part of safety, and dont buy too many so-called safe assets at the same time.