'Triple Whammy' Of Events Contribute To Plunge In Stock Market
PITTSBURGH (KDKA) -- The Dow Jones Industrial Average lost 940 points on the New York Stock Exchange on Wednesday, following a 700-point loss on Monday and a 200-point loss on Tuesday.
That's pretty horrific but not as bad as earlier this year. But will it get worse before it gets better?
"Today, we're on par to see the biggest drop in about two months," Michael Godwin, the chief investment officer for Fragasso Financial Advisors, told KDKA money editor Jon Delano on Wednesday. "We have a little bit of a triple whammy going on today."
He and many other analysts see the surge in coronavirus cases and the worry about how that impacts the world economy and our own economy as the principal spur to the decline.
"There's a partial shutdown that's happening now in Germany for the next month. And then local governments here, whether it's on the state level or local municipalities, may continue to drag out some of the restrictions and keep bars and restaurants closed and try to restrict movements of people," said Godwin.
But it doesn't help that the Republican Senate went home without passing a stimulus package, and President Donald Trump and the Democratic House remain deadlocked.
"The fact that we haven't gotten an additional fiscal stimulus passed is also weighing on the markets," says Godwin.
The third whammy is the uncertainty of the presidential race, although Godwin downplays this.
"In my mind, that's a tertiary reason as to why the stock market is sold off," he said. "I think the biggest concern for equities today and over the past week has been the notable spike in coronavirus cases."
And Godwin thinks it could get worse, depending on how long it takes to get a vaccine. So what should the average investor do about it? Not much, says Godwin.
"This is one of those times when you really want to have a long-term view as opposed to a very short-term view here because by 2022, we believe that this largely behind us," said Godwin.