Stock market sinks amid virus fears
Grace Gillespie, Staff Writer
A worldwide market crash began on Feb. 20, disrupting financial security around the globe and leading some stock markets to close the following day. The subsequent weeks saw countries trying to stabilize the fallout of the crash so markets would not fall further.
Every nation attempted their own way of fixing the issue. Japan repurchased 4.6 billion dollars worth of bonds to keep the economy in motion, while Mexico announced a fiscal policy to increase government spending. On March 3, United States Federal Reserve Chairman, Jerome Powell, informed citizens that there would be a 50 Basis Point cut to the fund rate in order to stem panic.
Although a plethora of countries attempted to reduce the changes of economic crises, some unprecedented factors, such as COVID-19, caused many such efforts to flounder towards the end of February, especially as more information regarding COVID-19 began to surface.
Due to investor’s fears about the impact of the virus on the global economy, as well as anticipated travel bans, demand for oil fell drastically. Some oil producers agreed to reduce production of oil because of the price fall. However, Russia and Saudi Arabia both declined to downsize production, leading to an even greater drop in oil prices.
The impact of such an oil surplus hit American shale oil production companies quite hard, since demand was low while the supply of the resource was abundant. This led to an enormous drop in the United States stock market, which was compounded on March 9, when US stocks took an even further tumble. This has caused many to refer to that day as Black Monday 2020.
The March 9 crash is the worst since the 2008 recession. The Dow Jones Industrial Average experienced a massive drop in the market, falling by 2,013.76 points, much lower than it was expected to.
On March 11, President Trump gave a speech from the Oval Office to address the current situation and offered assurances to citizens’ that the pandemic would be defeated. One day after the President’s speech, on March 12, the single greatest percentage drop since Black Monday of 1987 caused the Dow to fall by 12 percent. A lack of confidence in President Trump’s speech and the measures being taken to contain the spread of the virus resulted in a continued fall in the stock market.
The following day, both the European and Asia-Pacific stock markets were closed, while in North America, countries proposed several ideas to counteract the economic crisis. Canadian Prime Minister, Justin Trudeau, announced that the government was working on a fiscal stimulus plan. Nancy Pelosi, the United States Speaker of the House, stated that there would be an appropriations and pandemic countermeasure bill passed.