Did someone at the Federal Reserve turn off the printing press or something? It seems like it after the triple-digit blood bath during the Tuesday trading session.
Financial markets were spooked by new data showing 27 states have seen a spike in coronavirus cases. It also didn’t help when New York, New Jersey, and Connecticut announced a 14-day quarantine for travelers from COVID-19 hotspot states.
As a result, at the time of this writing, the Dow Jones Industrial Average plummeted 600 points and the Nasdaq Composite Index retreated from its all-time high by about 200 points.
It wasn’t all bad news, though.
Hertz, the bankrupt car rental company, soared as much as 50 percent to top $2 per share.
But the latest volatility could be contributed to the U.S. central bank and the surprise shrinkage in the balance sheet. Although quantitative easing expanded, the balance sheet contracted because of tumbling dollar swap lines.
Is the market set for another downturn? Or is this just a blip on the radar? As they say, never bet against the Federal Reserve.
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