UNITED STATES (OBSERVATORY NEWS) — The largest sale of US stocks in the last two years has just begun, strategists at the two largest Wall Street banks warn. It is reported by Bloomberg.
While the average correction of the S&P 500 lasted for four months, the current recession is likely to be longer due to continued uncertainty regarding coronavirus and the constraints faced by Federal Reserve officials, said Christian Muller-Glissman and Alessio Rizzi of Goldman Sachs Group Inc. This means that the decline that began last Thursday may not stop at least until July.
Strategists at Citigroup Inc. led by Jeremy Hale also alluded to a lack of clarity regarding the outbreak of the virus and the Fed’s monetary policy.
To illustrate at what point risky assets can become attractive, they indicated a drop in the S&P 500 index to 2730 points, which is 10% below its 200-day moving average. To achieve this level, the benchmark must fall another 12% from its current level.
This would put him on the brink of a 20% drop in the bear market, if you count from February 19.
The Dow Jones Industrial Average and S&P 500 indices fell for the fifth consecutive session on Wednesday.
Following the auction on February 26, the S&P 500 fell 0.38%, Dow – 0.46%. The NASDAQ Composite Index added 0.17% to close the market.
According to the former head of the Fed Janet Yellen, depending on the scale of distribution of the coronavirus, the economic consequences can have a significant impact on Europe and push the US into recession .
The proliferation of COVID-19 has led to disruptions in global supply chains and hit markets. Some companies, including Apple, Nike, Mastercard, and United Airlines, have already warned about the impact of the virus on their earnings.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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