E US Stock Market Weekly Update February 24- February 28, 2020

A very bad week for Wall Street with stocks having their biggest weekly losses since 2008 and all major US stock market indices losing their year-to-date gains and turning to negative returns. $3.6 trillion were wiped off the stock market last week.  An intense stock market selloff which was evidenced by the highest level of CBOE VIX Index at 40.11, in almost a year, as the index has a 52-week high of 49.48. Last week we wrote “Increased volatility in the stock market and financial markets is a high-probability event at least for now. ”This increased volatility due to the development of the coronavirus outbreak and the scenario of the virus becoming pandemic are now the main catalyst for moving the financial markets. The shift has turned from earnings announcements to daily coronavirus news. Scenarios for global recession have appeared on the financial news, but our opinion is to be conservative, as it is too early to have this confirmed." 

The big news was that Fed Chairman Jerome Powell mentioned that the Fed is closely monitoring coronavirus developments and will act if deemed necessary to support the economy, meaning potential interest rate cuts in March 2020. Scenarios about how aggressive the Fed may be have also appeared, ranging from 25 basis points to 50 or 75 basis points at the March FOMC decision. What is important for now is how will global financial markets react to latest news that China's official Purchasing Managers' Index (PMI), a widely-watched measure of economic activity, fell to a record low in February. The data showed a worrying collapse in domestic and export orders and a contraction of the country's burgeoning service sector. Investors believe the next few days will reveal whether the outbreak is accelerating in the United States, the world's biggest economy and how much the U.S. government is prepared to deal with an epidemic, and the economic damage in other countries.

For the week of February 21– February 28, 2020 the major US stock market indexes closed as follows on Friday, February 28, 2020:

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Disclosure: I have no position in any stock mentioned

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