Photo: Statista
How does the American public make sense of the news over this week regarding the drop in the stock market? Or should I ask the historic drop over 5 days? How is the rapid change in the stock index correlated with the damaging news of a dangerous spread (international) of the coronavirus? These questions are looming among the business community.
What about the average American?
The news this week is not good regarding the correlation of the coronavirus and the stock market. Regardless of which network that you receive your news, the news is bad. Why? Because the spread of the deadly coronavirus is threatening all aspects of American life. That might be a broad statement, but is eventually going to emerge to be true. How? Let me explain.
This morning on NPR, a stock analyst was interviewed about the recent historic drop in the stock market. Specifically, how the spread of the coronavirus which has created large uncertainty in business on an international scale. He stated that his organization was specifically watching the flow of goods via local routes in China. That is a direct test on the wellness of the Chinese population with respect to the coronavirus.
Indirectly, that is a test for the international flow of goods around the globe. Specifically, in America, that leaves manufacturers without goods (parts, supplies, products) to complete their sales within the United States of America. Which leaves us (the consumer) without products sold at our local stores. Stores may not be able to stock products that are commonly sold in the U.S.
Financial Standpoint?
Here are the large numbers for those who like dollar amounts impacted by the coronavirus. Stock analysts are forecasting no growth in 2020 for the S&P 500. Which is greatly concerning. The S&P 500 has lost nearly $4 Trillion dollars in market value in the last days. According to S&P and Dow indices, nearly $6 Trillion dollars in international market value has been lost over the last few days. If this is not a red light warning, I do not know what is.
Corporations are cutting back non-essential travel throughout the world. This means that many business conferences will have to decide whether travel is worth the risk. Tankers are sitting in ports in China stagnant. Japan is holding the Olympics? What is going to happen with tourism to the Olympics? How does that affect business in the longterm -- after 6-8 months? How businesses perform valuation will help push the market.
Human Health?
At present, the pathways by which the coronavirus spreads are unknown. More information will be known as international data is compiled across federal agencies acting with international agencies. Close collaboration is needed. Proper personal protection is needed on a national scale along with proper amounts of tests. The ability to overwhelm hospitals throughout the United States is completely possible. Therefore, information dissemination throughout the United States is critically needed.
Action is needed on a global scale. To recover as a nation, international work is needed too. Watching the spread of the coronavirus throughout the world will be critical toward our success as a nation in combatting the spread here in the United States. Based on the information coming out of the White House (i.e., President Trump) along with a Congressional hearing where the Secretary of Homeland Security this week, confidence remains low among Americans in combatting the coronavirus and restoring confidence in Wall Street. Time will tell.
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