Silver Lining in the Dow’s Worst Ever First Quarter

By  //  April 13, 2020

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The burgeoning chaos caused by Covid-19 continues to wreak havoc in the global economy, instilling enough fear to grip even the most successful business owners.

The burgeoning chaos caused by Covid-19 continues to wreak havoc in the global economy, instilling enough fear to grip even the most successful business owners.

Having experienced its worst-ever first quarter, the DJIA’s prediction is evident – more volatility. 

Economists are predicting more misery in Q2 as US businesses try to grapple with the virus. Rising unemployment and a high casualty list of businesses are the telltale signs of a shrinking economy and this has been reflected in the Dow’s performance.

However, despite the repercussions of Covid-19, the last week or so has created room for limited optimism.

DJIA’s 2020 Performance

It was on the 9th March when the stock market felt the full wrath of the coronavirus, with the Dow experiencing the largest point plunge in its entire history.

Records continued to be broken for the wrong reasons with the Dow being ravaged by two more record-setting point drops on the 12th and 16th of March, putting Dow futures trading in turmoil. Here are some of the figures:

• March 9th: The Dow lost 2,013.76 points to 23,851.02.

• March 12th: The Dow lost 2,352.60 points to nearly at 20,188.52.

• March 16th: The Dow lost 2,997.1 points to nearly at 20,188.52.

Prior to the crash, the Dow had totaled a record high of 29,551.42 on the 12th of February, a stark reminder of how quickly the pendulum can swing the other way in economics.

Last week, the Dow fell 584 points (2.7%) after recovering 12.4% the week before, creating much uncertainty about what will happen next, with some experts believing that the economy might recover sooner than expected after initially starting 2020 strongly.

However, coronavirus cases are multiplying at an alarming rate in the US, and the curve has yet to flatten, with the peak of the virus’ destruction expected to come soon. 

This outlook is echoed by US Surgeon General Jerome Adams’ statement, advising Americans to brace themselves ‘for the hardest and the saddest week of most Americans’ lives’, due to the coronavirus curve expecting to peak.

Government intervention

In an attempt to stabilize markets, the US government is set to inject a 2.2 trillion rescue package into the US economy. This staggering amount is part of a strategy aimed to support declining businesses, health care systems and workers. 

Over time, long-term investors may be encouraged to put their money back into valuable stocks, although it’s hard to predict how successful this strategy will be in the near future, with New York establishing itself as the epicenter.

Small signs of progress 

Stocks on the 27th of March recovered slightly despite the dire initial unemployment crisis, highlighting some resilience in the market.

According to some analysts, if the market continues to display small bounces of recovery amidst the chaos, this could signify the beginning of a new positive period.

This is especially true for some businesses in certain sectors due to the government’s record-breaking rescue package. 

Industries that are performing well

Businesses from both the tech and health industries are proving to be the most resilient against the Covid-19 pandemic, and this comes as no surprise.

E-commerce has been in unprecedented demand since the beginning of the lockdown, bridging the gap between customers and their products. 

Similarly, there has been substantial reliance on visual technology to help us adapt to our new way of living by enabling businesses to function efficiently via digital communications.

The new adjustment to remote working creates an opportunity for companies operating in visual technology to prosper in the future. 

Unsurprisingly, healthcare stocks have seen an upward surge in the markets. Co-Diagnostics lead the way, rising 34% after they received immediate approval from the Food And Drug Administration for their coronavirus test, which is claimed to be relatively inexpensive.

More companies in the same industry also experienced some gains. Vertex Pharmaceuticals spiked at 2.2% and Abott Laboratories jumped 0.9%.

The maddening and unprecedented first quarter of 2020 will go down as the worst Q1 in the Dow’s history and businesses will be glad to see the back of it.

As the coronavirus continues to spread, businesses will suffer from further uncertainty and volatility. Unfortunately, the US is soon expected to reach the peak of the coronavirus’ curve, making it seem likely that the economy will take another dip. 

However, some businesses will prosper. Our new way of living has created a demand for tech industry businesses to help us adapt to and cope with the demands of the pandemic.

Likewise, the reliance on health care companies on finding a vaccine to fight COVID-19 has created opportunities for savvy investors to prosper from.