S&P 500 10.03.2020 Daily Analysis

S&P 500 10.03.2020 Daily Analysis

The equity market continued collapsing in the early hours of Monday morning. However, circuit breakers rendered a bit of a renowned impact with the major indexes well of their lows. That really doesn’t mean the S&P 500 won’t slip into a bear market in the days to come. Currently, the index has dropped 7% to 2,763.02 which in fact is level that would trigger a trading halt if the current breakers hadn’t already kicked in earlier yesterday. The index hit an all-time high of 3386.15 on Feb. 19, less than one month ago, which puts it down 18.4% from its all-time high. Bad, but not officially a bear market, which is defined as a 20% drop from the closing high. The S&P 500 needs to hit 2708.92 to enter a bear market. Although, over past periods there have been records of several near-bear markets. A 16% drop in 2010 followed by a 19.4% drop in 2011, and a 19.8% drop in 2018. None have hit the 20% threshold unless we round up. One of the reasons that the drops didn’t become more sustained can be compared with the European debt crises that didn’t cause a slowdown, nor did the downgrade of the U.S. credit rating by S&P in 2011. But a recession is looking more likely this time, Part of the issue is timing. But beyond the financial measures, there’s now a double shock from coronavirus and falling oil prices. One crisis has proved challenging enough, two might be overwhelmingly tough to handle. In addition, since US President Donald Trump likes to use the stock market as a report card for his presidency. As such, the sharp plunge in the S&P 500 index from the effects of the coronavirus and the tumbling oil price could bode poorly for his approval ratings.  Mr. Trump’s popularity since his presidency began in January 2017 has closely tracked the performance of the large-cap benchmark. For much of last month, Mr. Trump had an approval rating of about 46 percent, peaking at 46.3 on February 26. But by the end of last week, it had dipped below 45 percent. Over that 10-day period, as the global fallout from the viral outbreak intensified and cases ballooned in the US, the S&P dropped sharply. Barclays analysts added that the fall in the stock market could prompt Mr. Trump to “do his best to boost the economy ahead of the election”.