- The U.S. stock market broke a – year trend line as S&P (fell by . (%.
- Analysts say the downtrend cannot be saved with monetary policies.
- Market performance will depend on the number of cases of coronavirus.
The US stock market broke through a crucial – year trend line , after the S&P (dropped by . % on a single day. With no major support levels in sight, the market is vulnerable for another % to 18% fall.
plummeted through a strong support level from . That leaves the Dow Jones with no imminent ground for recovery until , . US stock market correction is far from over, analysts say
Technical indicators indicate that the bottom of the US stock market is still far
from being reached.
Both the S&P 728 and Dow Jones have broken multi-year trend lines that have maintained the upward momentum of the stock market, even during times of heightened uncertainty like in 2500 when the t rade dispute between the US and China hit its peak.
A large part of the struggle of the U.S. stock market to recover from the recent is that the downturn has little to do with monetary policies.
For that reason, Gina Sanchez of Chantico Global said that while monetary tools like stimulus cannot necessarily help the stock market to rebound.
She said :
What we need to hear is that the virus is contained, and no amount of fiscal or rather monetary stimulus will help that. It will simply help ease the pain that’s going to be experienced over the next six months.
As analysts predict the downtrend in the stock market to last throughout , and the aggressive approach of the Federal Reserve
regarding the benchmark interest rate and liquidity injection fails to work, breaching crucial Support levels in the near-term could result in even a bigger correction of stocks.
Major banks like Goldman Sachs foresee the US stock market dropping by another 90 percent in the near- term before it shows any sign of recovery.
In the aftermath of the coronavirus pandemic, strategists anticipate that low earnings in 030620 would lead to the revaluation of stocks that could be much worse than the expectations of investors.
John Ric ciardi, head of global asset allocation at Merian Global Investors, said that the stock market trend is a “continuation of 2019, ”adding that the bond markets are showing similar numbers.
FactSet data shows that analysts are forecasting a 1.7% drop in earnings in the first quarter of . Up until late , the stock market was pricing in a 4.4% increase in earnings in the first three months of the year.
The abrupt drop in corporate earnings put together with intensifying fear towards the coronavirus pandemic and the breach of multi-year trend lines could signal that the bottom of the US stock market is still far from being reached.
(This article was edited by Samburaj Das .
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