The Dow Jones Industrial Average has lost all gains it amassed since President Donald Trump took office, a further indication of the turbulent effect of the coronavirus pandemic on global markets. The Dow plunged 1,428.48 points, or 6.7 percent, an intraday low of 19,808.90. That’s below its close of 19,827.25 on Jan. 20, 2017, the day of the president’s inauguration.
Economic activity will be significantly suppressed as long as social distancing measures are in place,” said David Bahnsen, chief investment officer at The Bahnsen Group. “I don’t know when the stock market will discount the future in a positive way and I don’t know when the future itself will become positive.”
Although stocks surged yesterday as the White House announced a $1 trillion coronavirus relief package, fears of a global recession continue to mount, exacerbated by a federal deficit that already stood at $1 trillion before the pandemic.
“You’re supposed to have dry powder for the next crisis,” said Kristina Hooper, chief global market strategist at Invesco. “When the history books are written, the government will certainly be faulted for taking on too much debt. The Fed will be faulted for maintaining ultra-accommodative rates.”
Hooper’s statement is not dissimilar to the thoughts of Maya MacGuineas, president of the Committee for a Responsible Federal Budget, who expressed her misgivings in a statement last week.
“Instead of taking advantage of our strong economic growth to get our fiscal house in order, we let it continue to fall apart by passing unpaid for tax cuts and spending increases,” MacGuineas said at the time. “That leaves us less prepared for what could be a sustained economic slowdown.”
President Trump has often touted the stock market as a sign of his administration’s economic successes.
“Since my election, U.S. stock markets have soared 70 percent, adding more than $12 trillion to our nation’s wealth, transcending anything anyone believed was possible. This is a record. It is something that every country in the world is looking up to. They admire,” he said during last month’s State of the Union address. “Consumer confidence has just reached amazing new highs.”