The Dow Futures indicate a 930-point drop upon opening, as investors brace for another frantic sell-off in the U.S. stock market despite a key breakthrough in coronavirus testing.
The Cleveland Clinic in Ohio developed a coronavirus testing system that is able to diagnose an individual in less than eight hours, as opposed to two to three days.
Highly-regarded scientists like Yale professor Howard Forman previously warned that the coronavirus pandemic could lead to 100,000 cases in the U.S. due to the nation’s low testing capacity for the virus.
With the implied 930-point drop, the U.S. stock market is set to officially enter a bear market on March 12.
In technical terms, a bear market occurs when an asset or an index drops by 20 percent from its recent high.
Since the February 21 high at 29,551, the Dow Jones has fallen to 23,551. Another 930-point drop would lead the Dow Jones to drop to sub-23,000, resulting a 22% drop from its recent high.
The panic in the U.S. stock market and the noticeable decline in the appetite of investors for risk-on assets primarily stems from the government’s lacking response to the local coronavirus epidemic.
The number of coronavirus cases in the U.S. has jumped to over 1,244, and Italy’s severe outbreak where cases ballooned from 700 to 9,000 within 11 days has intensified fear in the U.S.
The stock market plummeting to bear market levels despite talks of establishing a drive-thru coronavirus testing facility could indicate that the downtrend of stocks is just beginning, as analysts warn.
In South Korea, drive-thru testing and highly efficient testing systems allowed the country to pass the peak of the outbreak and to see a declining number of cases on a daily basis within a month.
There are hopes that hospitals in Cleveland implementing the system established by the Cleveland Clinic would lower the number of new coronavirus cases in the area, and facilitate more tests in the coming days.
An ER doctor said:
The Cleveland hospitals are also developing drive thru testing centers. Why on earth would the CDC wait till 3/2 to give the okay? One would think they would have begged for all the resources they could get since President Jenius, MIT Nephew cut all their funding.
Strategists like Ed Keon, chief investment strategist at QMA, have said that it is difficult to predict the bottom of the stock market in the current environment.
Keon noted that it would take a “fool” to say that the stock market has reached the bottom, anticipating higher levels of selling in the near-term.
Analysts, however, generally agree that once the bottom is reached, the stock market is highly likely to see a strong relief rally and a firm recovery backed with rising momentum.
Last modified: June 24, 2020 1:03 AM UTC