The question now is whether the unprecedented intervention of central banks and other policymakers – with help that is potentially on the way – will be enough for risky assets to exist or will be knocked down by another leg.
Some investors think stocks will fall even more given uncertain forecasts.
“Recent experience suggests that it would be wrong to over-indulge in a stock market crash of this magnitude, which seems to reflect some of the growing weight of bad news in the global economy,” ING’s Robert Carnell said in a note to clients. Friday.
Seloloff partly fueled remarks by Federal Reserve Chairman Jerome Powell that the U.S. job market remains in an incredibly bad position, and that the recovery will be largely defined by the course of the virus.
But Carnell notes that Powell really only said what everyone already knew: that the global economy was in a bad place and that there would be no quick recovery.
JJ Kinahan, chief market strategist at TD Ameritrade, told me that optimism was supposed to satisfy real trade at some point, reducing corporate values.
“The reality is the way you start looking at the numbers, a lot of these companies aren’t going to open up fast enough for the market,” he said.
In recent weeks, a huge expansion of the Federal Reserve’s balance sheet has brought investors confidence to return to risky assets. That support went nowhere, and Powell assured market viewers that the central bank would help as much as needed.
Greater fiscal assistance could be on the way. U.S. Treasury Secretary Steven Mnuchin said Thursday that the White House is considering another round of stimulus checks, the Wall Street Journal reports.
But with the VIX, the measurability of S&P 500 volatility, hovering above 40 on Thursday, the highest level since April, the direction of travel for stocks going next week is murky.
“Some investors’ fingers will be burned. But others will see it as an opportunity to buy,” Carnell said. “After [Thursday’s] adjustment, it is not said which way the market will go. “
One or two blows from coronavirus and Brexit threaten the UK
Britain is already on the verge of the worst decline of all major economies caused by the coronavirus. There are now growing fears that companies could be hit by other body blows this year – the failure of trade talks with the European Union, my CNN Business colleague Hanna Ziady reported.
Latest: The economic picture in the country is already terrible. Production in the UK fell a record 20.4% in April from the previous month, the government announced on Friday. The country’s economy was roughly 25% smaller than in February.
But the situation could worsen as the country races to meet a trade agreement with the European Union, its single largest export market, by the end of the year.
The Organization for Economic Co-operation and Development said this week that it expects the British economy to shrink by 11.5% this year, even if a basic free trade agreement is reached with the European Union and a second wave of contagion is avoided.
This is the worst projected decline in major economies. And if infections re-emerge and stricter measures of social distancing are reintroduced, GDP could collapse by 14%, the OECD said.
On Thursday, the head of the Confederation of British Industry, which represents 190,000 companies in the UK, warned that companies would not be able to withstand another shock, and many were already struggling to survive.
“The resilience of British business is absolutely high,” CBI Director-General Carolyn Fairbairn told the BBC. “Every little thing stored, all the prepared supplies are ruined.”
Calculating corporate America in the race is gaining in importance
Protests around the world against police brutality and systemic racism are forcing companies to make changes in policy and corporate leadership, and announcements from Silicon Valley to the retail sector and the startup universe have been piling up all week.
Some changes: Sephora said it will dedicate 15% of its shelf space to black stamps, while Walmart said it will discontinue the practice of locking black hair care products sold in its stores. The drug chains Walgreens and CVS Health are following that application, reports AP.
Meanwhile, Audrey Gelman stepped down on Thursday as CEO of Wing, a collaborative startup for women. Members and workers have spoken in the past about racist incidents and harassment. Top brass website Refinery29 and media giant Condé Nast also left this week after criticism of the corporate culture.
And Nike said Thursday it will do so from June 19 (June 19) – celebrating the end of slavery in the United States – as a corporate holiday, joining Twitter, Square and Vox Media.
But so far, Corporate America is freeing itself from talking about police defense.
My CNN Business colleague Chauncey Alcorn addressed several Fortune 500 companies that have issued public statements in recent days supporting the Black Blacks Matter movement, including Amazon, Facebook, Twitter, Bank of America, Chase Bank, Citigroup, and Google. No one said they supported the defenses of police administrations.
A consumer sentiment survey at the University of Michigan for June arrives at 10 a.m. ET.
Next week: In the United States begins a series of closely monitored economic data for May, including retail sales and accommodation.