03/04/2020 The Highlight
The stock market is in full rollercoaster mode.
On Monday the Dow Jones gained over 1,200 points, marking its biggest point gain ever.
The rally was short lived however, as the market suffered nearly a 1000-point loss just one day after, amid an emergency interest rate cut from the fed.
More volatility appears inevitable as the market grapples with fears of a sustained coronavirus outbreak.
Economic News
- Interest Rate Cut: The Federal Reserve cut interest rates by 0.5% on Tuesday, due to concerns around the economic impact of the COVID-19 coronavirus outbreak. The Fed said the coronavirus poses evolving risks to the U.S. economy, in a statement following the decision. All 10 Fed members voted unanimously for the emergency rate cut, the largest since 2008.
- The Shop Safe Act: A new bill was introduced on Monday that would hold e-commerce companies like Amazon and eBay liable for counterfeit products sold on their platforms. The bill outlines a series of steps that companies must take to prevent the sale of knockoffs by third-party sellers. According to the OECD, fake goods accounted for 3.3% of global trade in 2016.
- Further Cuts Expected: Following the U.S. Federal Reserve’s emergency rate cut on Tuesday, Fed Chairman Jerome Powell indicated that other central banks could follow with action of their own. According to analysts, the European Central Bank and the Bank of England could cut interest rates later this month. Further cuts in the U.S. could be imminent as well, after President Trump stated that a half point cut was not enough.
Market News
- Costco Surges On Virus Fears: Shares of Costco saw its biggest gain since 2009 on Monday, as shoppers flocked to stores to stock up on food and essential supplies over the weekend amid fears related to the coronavirus outbreak.
- Target Reports A Mixed Q4 Despite Online Sales Boost: Shares of the retailer fell over 4% on Tuesday, amid reporting a fourth quarter earnings beat on Tuesday. Although Target missed sales estimates, online sales are exploding for the company, growing 20% in the quarter.
- Buffett Adds To Delta Stake: Legendary investor Warren Buffett boosted his stake in Delta Air Lines by over $45 million, according to a new filing on Monday. The move comes as the company’s shares saw roughly a 20% drop in value last week due to coronavirus fears. Buffett is well-known for buying into companies that he views as long-term value plays when the rest of the market is fearful.
Alternative Investments
- Brick-And-Mortar Renaissance?: Real estate-focused venture capital firm Fifth Wall Ventures closed a $100 million fund to invest in digital-native brands and help turn them into physical locations. The fund said it will help digital retailers that envision their next stage of growth in the world of physical stores. The decision comes at a contentious time in retail; in 2019 over 9,300 U.S. stores closed.
- Investing App’s Awful Week: Popular commission-free trading app Robinhood is not off to a good week. The app was down for 17 hours on Monday, restricting users access to their funds on a day where the Dow Jones Industrial Average saw its biggest point gain ever. Robinhood saw another major outage on Tuesday, bringing the app’s validity and reputation into question as a viable alternative to traditional brokerages.
Personal Finance
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