Initially, much of the market’s gains were driven by a few hot tech stocks , such as Amazon and Netflix, which benefited from the lockdowns, as online shopping took off and people who were stuck at home streamed plenty of movies.
Then there was the stock trading app Robinhood, with its 13 million customers, many of them young people with little experience trading. And many are especially attracted to high-gloss tech stocks such as Apple and Microsoft.
The Coronavirus Crisis Stocks Go Into Shock. Dow Plunges Nearly 3,000 Points The worst-hit stocks were those affected by the travel restrictions, such as cruise lines, air carriers and energy companies. United Airlines stock fell to $24 in March after selling for $86 a share on Jan. 1.
All this sent a message to the financial markets: The Fed isn’t about to let you go under. Buoyed by those assurances, investors began dipping their toes back in the water.
“In terms of the broad economic changes, these companies are on the right side of history,” says Lu Zhang, a professor of finance at the Fisher College of Business at Ohio State University.
“We are deploying these lending powers to an unprecedented extent … will continue to use these powers forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery,” Powell said in April.
Congress approved supplemental unemployment benefits and $1,200 stimulus checks that helped many of the hardest-hit Americans pay their rent and keep food on the table. And the U.S. Treasury got those checks out quickly.
Then something surprising happened: The stock market rebounded. With a vengeance.
Tesla’s wild ride and a new centibillionaire
Congress, Fed and Treasury to the rescue
No one predicted what a tumultuous, stomach-churning year 2020 would be for the stock markets. And few foresaw how well it would end up.
Even with all the tumult, the Dow finished the year up 7.2%, and the S&P 500 did even better, gaining 16.3%. Meanwhile, the Nasdaq composite index, which is dominated by hot technology stocks, soared by a whopping 43.6%. stock articles 2020
But few stocks exploded in value as much as the electric-car maker Tesla, which rose more than 700% this year, eventually getting added to the S&P 500. Even founder Elon Musk, whose Tesla shares were worth so much he became a newly minted centibillionaire , complained in May that the price was too high.
On March 16 alone, the Dow plummeted nearly 3,000 points , losing 12.9%, as investors worried about the prospect of economic destruction wrought by COVID-19. The drop in stock prices was so large and so swift that it triggered multiple trading halts that day. In fact, the New York Stock Exchange suspended trading several times during those days.
Throughout the summer and fall, prices began to creep up again, and by Aug. 18, the Standard and Poor’s 500 was hitting records again. And the Dow crossed 30,000 for the first time ever on Nov. 24.
Online brokerage companies such as Fidelity and Charles Schwab saw massive increases in trading volume.
Yvette Arrington with the New York Stock Exchange trading floor operations watches the market slide on March 9 as coronavirus fears grip the financial markets.
Between Feb. 12 and March 23, the Dow lost a stunning 37% of its value.
The Federal Reserve, the Treasury Department and Congress took quick, decisive action to support the economy during the worst of the meltdown.
Stocks 2020 First A Stunning Crash, Then stock articles 2020 A Boom, Creating Centibillionaires NPR
“It’s a sacred number, 30,000,” President Trump said at the White House. “Nobody thought they’ll ever see it.”
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” Federal Reserve Chair Jerome Powell said on March 13.
It was a chilling time for investors, when the bottom seemed to be falling out of the global economy. Some 22 million jobs were lost in April and May in the United States as businesses were forced into lockdown mode.
In fact, the stock market gains this year have made the rich a lot richer at a time when tens of millions of people are still struggling without jobs, and they have exacerbated the country’s wealth gap.
These superstar tech stocks helped send the overall market higher. Apple’s market share even hit $2 trillion in August.
Enlarge this image Yvette Arrington with the New York Stock Exchange trading floor operations watches the market slide on March 9 as coronavirus fears grip the financial markets. Richard Drew/AP hide caption
The Coronavirus Crisis Closed All At Once: Restaurant Industry Faces Collapse The Fed cut interest rates to near zero , and then stepped in with a broad $2. best penny stocks 2021 india 3