Stock markets undergoing stress due to the coronavirus outbreak
Post the most difficult week for the Wall Street since the year 2008 and the financial crisis as the epidemic of coronavirus began and shut the swaths of the economy of United States and the health of United State stock market and this bond market might now be dependent on how the debt of the corporate is faring in the months to come. The S&P 500 and the Dow Jones in the week had suffered their most difficult week since the year 2008 and the financial crisis and both of the benchmarks had fallen into bear market as it declines over 20% from the record highs.
The pundits in the market have suggested now the whole industries like the energy and airlines might go underwater without the support from federal government support after the restrict travel of President Trump from the European markets to the United States in the week and the cities and the states had shut the sporting down and the entertainment and cultural events. The war of oil price had started by the Russian and Saudi Arabia is going to not help in the sector of energy either.
As a consequence, the investors have now been eyeing a potential for the crunch in markets for the corporate debt and also the potential bankruptcies post the rapid growth of credit since the year 2008 in financial crisis as the businesses had taken advantage of the lower rates of interest for leveraging up and boosting the profits.
The financial regulators and investors have been raising concerns already in the recent moths were the funds handled the corporate bonds, leveraged loans and the other securities of fixed income which are the most vulnerable.