Markets are mixed in morning trading as industries adjust to the new normal
After yesterday’s news that the U.S. automakers would temporarily close their doors and the US President Donald Trump invoked the Defense Production Act to shift manufacturing capacity to meet equipment shortages, trading on the major markets was mixed investors adjust to a global slowdown in trade.
Warnings regarding the current economic situation are coming fast, and are increasingly dire. Several large domestic banks are now anticipating a double-digit percentage decline in GDP for the US in Q2. The equities market is still coming to grips with the new normal.
Thirty minutes into the morning here are the numbers:
- DJIA: dropped 1.87%, or 372.76 points to 19,526.16
- S&P 500: fell just under 1%, or 22.03, to 2,376.07
- Nasdaq Composite: was up 0.51%, or 35.50, to 7,025.34
Pushing back
Global efforts to mitigate the spread of the novel coronavirus are impacting economies around the world, with Europe announcing a huge bond buying program and the US Federal Reserve supporting money market funds domestically. Unemployment in the US rose sharply according to federal statistics and the economy should expect more of the same as factories and stores close their doors while a large portion of the country stays indoors to halt the spread of COVID-19.
Meanwhile, the White House economic relief plan is slowly taking shape and making its way through Congress. The proposal calls for American adults to receive $1,000 in cash and $500 per-child over the next three weeks. Another payout would follow in May if the economy and businesses have not recovered.
That said, not all industries are taking blows of the same size. The divergence among the three major market indexes points to the different fates for the tech-heavy companies which are becoming increasingly central to business operations as the world moves to remote work; today’s tech rally in the face of further declines in the value of the firms that make up the DJIA is notable. SaaS companies, a key technology niche, are up a sharp 4% today in early trading.
Virtual services like remote networks, security, video conferencing, and other messaging tools are more necessary than ever as businesses which can continue to operate are doing so via the Internet. And as tech firms are more remote-work friendly, they may have a better shot at staying open. Investors are betting today that they will do better than the economy as a whole.
A day of mixed equities results first thing is welcome after recent declines. More at the end of the day.
Source: TechCrunch
