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Violent protests have taken place for six straight days in dozens of U.S. cities. The stock market is volatile. Now Dow Jones is 100 points up, though when the market opened it was in the red.
The U.S. equity market started the week by falling as investors are still focused on how the ongoing protests across the country are impacting the overall businesses. The Dow Jones Industrial Average fell 0.25% when the market opened as well as the S&P 500 while the Nasdaq Composite slid 0.36%. Last week was pretty much better for the indexes. Monday’s moves came after the S&P 500 and Dow each gained at least 3% last week while the Nasdaq Composite rose 1.8% to close out May. Those gains were boosted by investors whose belief that the global economy will successfully reopen after the COVID-19 outbreak enforced the shutdown of economic activity in global terms. However, it seems that the market will still be pretty bearish since George Floyd, an unarmed Black man, died while in police custody in Minneapolis, Minnesota. The police officer killed him intentionally using force and the crowd went savage thorough the USA. Businesses, therefore, are kept closed, some of them are even shutting down rapidly.
Protests Can Affect the Stock Market and Slow Down the Economy
The thing is that during the major turmoils, the economy usually is frozen. U.S. President Donald Trump condemned these happenings but was, together with his family, removed to a shelter yesterday after protesters threatened to evade the White house as well. There are numerous people being hurt or even dead, and the National Guard also took part.
It is the question though, will this will be a trigger for a new coronavirus wave since mass protests usually mean – a mass of people.
Also, investors are monitoring the again rising tensions between China and the U.S. President Donald Trump who said Friday the U.S. would end its special treatment towards Hong Kong.
Art Hogan, the chief market strategist at National Securities, stated:
“Nothing that has happened since the market closed on Friday has been market positive. When you think about clearly we’re beginning to take U.S.-China tensions seriously and you add on to that the massive amount of disruption going on in almost every major city in the country right now, none of that could be seen as market positive. At the levels we’re at, I wouldn’t be surprised to see the market take a pause and pull back.”
Second Wave of Coronavirus Is a Problem
But the protests and riots in teh U.S. is not the only issue that may have a serious influence on the market. Let’s not forget that the coronavirus pandemic still remains to be a threat.
Peter Berezin, chief global strategist at BCA Research wrote in his note to clients:
“The main downside risk facing stocks is a second wave of the disease. If fears of a new outbreak were to escalate, risk assets would suffer.”
He also recommended a “modest overweight” portfolio allocation to stocks, adding: “Even if a vaccine does not become available later this year, increased testing should allow for a more economically palatable approach to containment strategies.”
Still, after one hour of trading, all three indices went to the green. The Dow Jones rose by 0.27% at 12:18 pm ET, while the S&P 500 jumped by 0.27% at the same time. The Nasdaq 100 increased by 0.20%.
The situation however doesn’t seem to be any brighter for now. Washington, DC, Mayor Muriel Bowser announced a two-day curfew beginning at 7 p.m. ET Monday evening.
Bowser stated that protesters have the right to exercise the First Amendment but should not “destroy our city” in the process.
Check out other market news on Coinspeaker.
Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.
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