The coronavirus has greatly affected the United States, causing economic damages and challenges in the stock market. Most employed Americans lost their jobs as many more businesses closed down amid lockdown measures. However, there have been plans to reopen the economy.
The most challenging thing is how will the US control the surge of cases to avoid the second wave of coronavirus which might damage the economy further. Dr. Anthony Fauci says the US might reach over 100,000 cases of coronavirus per day following the economic reopening. This might cause a huge problem to the stock market as prices may plunge due to economic distress thereby stalling the rally.
Furthermore, the investors may fear to invest in the market and even sell their stocks just as Warren Buffett did. When many investors sell a large volume of their securities, they might cause a stock selloff.
More:
- A Face Mask Mandate Might Save the US Economy
- South Africa Reopens Economy as Government Lifts Alcohol Restriction
The Trend And Catalysts Of The US Stock Market
According to recent economic data, there has been a slight increase of about 3% in the market since late June. Tom Essaye says that there are reasons behind the rally or increase of prices in the stock market. The factors may be due to the government’s stimulus, a tactic to lower the rate of cases and positivity towards a vaccine.
Tom Essaye, the Sevens Report founder, says:
“A combination of stimulus, positive trends in the virus, economic reopening, and hopes for a vaccine drove stocks higher in Q2. As we begin Q3, only one of those tailwinds is currently in place: Stimulus.”
Charles Dumas says that there would be a slower economic growth despite easing measures and reopening the economy.
The expanded unemployment benefits are set to expire on July 31, leaving 21 million unemployed Americans with a 60% income reduction and no stimulus check to fall back on.
The Senate must take up the HEROES Act and extend unemployment benefits immediately.
Please share this.
— Robert Reich (@RBReich) June 30, 2020
The Stimulus Package in the United States
President Donald Trump signed a CARES Act on March 27 signing a $2trillion relief program. This relief was the largest emergency relief bill ever in American history. It was to help families, companies, businesses, and sustain its economy. Not everyone might receive the relief funds as there are strict qualifications that people needed to fulfill.
Reports say that there is a possibility of a new stimulus check in July. Mitch McConnel says the Senate is in the process of making a sober decision concerning the check. Just as the 1st one, there are qualifications people need to meet and the IRS criteria in sending the payments. From July 3rd to July 17th the Senate is to take a recess and be back in session as from July 20th to August 7th.
Thereafter, the Senate will take another break from August 10th to September 7th and be back to make a decision. The government looks forward to the stimulus sustaining the drive of the market.
Factors That Can Halt the Correction Of Stocks
A stock market correction involves a market decline of over 10% but less than 20%. Through proper measures that may decrease the number of cases then there might be no decline in the market. Furthermore, positive progress in the release of a vaccine, which scientists are still in doubt, may sustain the rally and help stop the correction of stocks. Fauci adds and says that there are chances of an ineffective vaccine to fight coronavirus.
