- The Dow Jones is set to open with a 580-drop amidst heightened coronavirus fear.
- A Yale professor warned the U.S. is not testing nearly enough individuals compared to other countries.
- Massive outflow of funds from the stock market raises probability of a sizable pullback.
The Dow Jones Industrial Average (DJIA) is set to open with a staggering 580-point drop, swayed by rising coronavirus fear, massive $23 billion outflows from the stock market, and dissatisfaction with the rate cut.
Investors remain concerned with the government’s handling of the coronavirus outbreak in the U.S., as Yale professor Howard Forman warns the country is in a crisis.
Coronavirus shock is rattling all markets
Throughout the past week, scientists have warned the U.S. government that the capacity of coronavirus testing of the nation significantly falls behind other heavily-affected regions in the likes of South Korea and Japan.
Forman said that there could be 100,000 individuals infected with coronavirus in the U.S., primarily due to the lack of large-scale testing of the virus.
He was quoted as stating:
It is well within the realm of possibility that there are 1000,000 people infected with this right now in the United States…It wouldn’t surprise me if we were to learn that most major hospitals have coronavirus patients in them right now.
As a response to the effect of the coronavirus epidemic on the global financial market and the Dow Jones, the Federal Reserve issued an emergency 50-basis-point rate cut.
Despite the decline in the benchmark interest rate, the Dow Jones has struggled to find back its momentum. It is expected to fall to the low-25,000 point region at the opening, for the first time since May 2019.
Gold has started to rally as Dow Jones slumped in pre-market, rising by three percent within a 24-hour span. The yield of the 10-year Treasury fell even further to sub-1%, as the outflow of funds from the stock market hit $23 billion.