It may come as no surprise, but it’s now official. According to the National Bureau of Economic Research, the U.S. entered a recession in February, marking the end of the 128-month expansion that was the longest going back to 1854.
Meanwhile, the World Bank said this week the global economy is expected to shrink by about 5% in 2020 as a result of the coronavirus pandemic, making it one of the four most severe downturns in 150 years, noting that never before have so many countries entered a recession at once.
In other economic news, the Organization for Economic Cooperation and Development said a second wave of lockdowns to counter a resurgent novel coronavirus would deal a terrible blow to a global economy already facing a severe contraction. The OECD said it expected the global economy to contract by 6% this year if a second wave of infections and containment measures can be avoided. However, the news in the U.S. isn’t particularly good as some states that were largely spared from the pandemic are now seeing record hospitalizations, causing experts to fear that a second wave may be an inevitability.
Finally, Fed officials on Wednesday signaled plans to keep rates at zero for years, adding that the U.S. unemployment rate would average between 9% and 10% during the last three months of the year. All the sobering news and data has had a chilling effect on markets, especially as the week progressed. On Monday, markets were up as Friday’s surprisingly upbeat jobs report continued to fuel hopes for a quick recovery. The Dow was up more than 460 points, while the TSX added 121.
Although the TSX, S&P 500 and Dow fell on Tuesday and Wednesday after recent strong gains, the Nasdaq was becoming the story of the week after hitting new highs in the first three sessions and closing above 10,000 for the first time on Wednesday.
However, market sentiment soured drastically on Thursday as investor fears of a surge in coronavirus infections sent stocks into free fall. By Thursday’s close, the Dow was down more than 1800 points, nearly 7%, while the Nasdaq lost 527 and the TSX plunged 650.
source https://richarddri.ca/u-s-officially-in-recession-nasdaq-hits-new-highs-before-rough-thursday/
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