NEW YORK, Mar 22 (Reuters) – Wall Street analysts and investment managers are looking forward to a tough new week for U.S. markets, as coronavirus cases and deaths in big cities are on the rise and lawmakers are still fighting over a financial aid package in Washington.
US stocks have already fallen more than 30% from their highs reached in mid-February, weighed down by the spread of the epidemic, even the safest areas of the bond markets have suffered from liquidity in a wave of sales not seen since the 2008 financial crisis.
Still, the problems are not over, analysts and portfolio managers told Reuters on Sunday.
“This is a biological event,” said Nela Richardson, investment strategist at Edward Jones in St. Louis. “The market is merely a symptom of the global pandemic,” he added.
Over the weekend, several states expanded their restrictions on business operations or the non-essential movement of citizens. Nearly one in four Americans has been ordered to stay home, with major cities like New York and La Vegas in quarantine.
The number of coronavirus cases in the United States rose to more than 33,000 as of Sunday afternoon, from about 3,600 the previous week, according to a Reuters count. At least 390 people have died. The number of cases in New York skyrocketed and Mayor Bill de Blasio said hospital staff are 10 days from running out of supplies.
(Click here https://tmsnrt.rs/2xY3vBH for a graph on coronavirus cases in the United States)
The lower economic activity will obviously have a severe impact on the U.S. economy and corporate profits, but market strategists and economists said its severity is difficult to predict.
Three important factors are how much aid the federal government will inject into the economy, how effective the structure of the aid package will be, and how long it will take for the number of new cases to begin to decline in the United States, also known as the “flattening of the curve”. of the coronavirus. “
On Sunday, US Treasury Secretary Steven Mnuchin said Congress is close to concluding an aid package that would offer families a one-time payment of $ 3,000 and markets $ 4 trillion to support the economy. .
Lawmakers, however, are still discussing details, and it is unclear when they could approve the package.
Some analysts said things could eventually turn as bad as during the 2008-2009 crisis, when stocks fell 57% and the US Quarterly Gross Domestic Product fell as much as 4% yoy.
That is the worst case scenario for Barclays, according to a report on Friday prepared by Maneesh Deshpande, the head of the US equity strategy and the bank’s global derivatives strategy.
Scott Minerd, head of global investments at Guggenheim Partners, is not so sure. “There is good reason to believe that this is potentially worse than the financial crisis,” Minerd said in his weekly report.
(Report by April Joyner; Edited in Spanish by Ricardo Figueroa)