Wow, oh, wow! What a week it’s been in the markets – both domestically and globally. I’m sure you’ve been paying attention, but if you haven’t, there has a been a massive amount of fear-induced selling due to the novel Coronavirus.
In fact there has been so much selling that Dow Jones Industrial average, S&P 500, and the NASDAQ Composite all had their worst weeks since the global financial crisis in 2008.
Each of those indices is now in correction territory, meaning there’s been a loss of at least 10% from their respective highs. Corrections are not uncommon as they happen on average every 8 to 12 months. If selling continues, however, and markets go down 20% below the all-time highs, that is called a bear market.
So what happens next? Well, we’ll see. A lot depends on the progression or containment of the coronavirus, along with the timeline of vaccine development.
This most likely won’t be resolved in a few weeks though so if the disease spreads even more, a disruption in supply chains will have a heavy impact. As one domino falling affects the next, the shut down of industry and production in one part of the world can affect end users and buyers in another.
A global ripple, left unchecked, could develop into a recession. A recession is a period of declining economic performance across an entire economy, frequently measured as two consecutive quarters.
What can be done? Stay tuned for future posts!
My Two Cents 