With the continued downfall of the stock market due to the coronavirus, the market has lost all the gains it has made since President Donald Trump’s 2016 surprise election win.
According to a Markets Insider report, U.S. stocks fell more than 8 % yesterday. The total market cap of the U.S. equities market, has fallen by $11.5 trillion from its peak in February, to $23.8 trillion as of Thursday morning.
The current market is roughly equal to the size of the market when Donald Trump won the presidential election in 2016.
Now, the government is trying to catch up to the problem. Sen. Chuck Schumer (D-NY) is in the process of drafting a letter to the president pushing him to issue an emergency declaration. This would allow the Federal Emergency Management Agency to use more than $35 billion of the disaster relief fund to help local and state governments help contain the coronavirus.
The Federal Reserve Bank also announced Thursday it has injected $500 billion directly into money markets through a three-month market repurchase agreement. The Fed also called for $1.5 trillion in capital market injections Thursday afternoon.
Since President Trump took office in 2016, the stock market has climbed to new highs due to relaxed regulations and the 2017 tax cuts, which further fueled growth even more by cutting corporate taxes and allowing massive stock buyback programs.
However, the government’s relaxed response to the coronavirus outbreak, combined with the oil price war between Russia and Saudi Arabia that drove a 32 percent price drop, has left investors confused and cautious and reluctant to buy. The Dow Jones Industrial Average fell 20% in less than a month, the fastest drop in its history.
In the past, a 20 percent declines from the index’s peak took 255 days on average, with a median of 156 trading sessions.
The ripple effect is starting to affect the job market as layoffs have begun in some industries. Additionally, three major U.S. sports restricted access to team facilities before suspending their seasons.