Coronavirus spreads fear and panic to stock market
The stock market had its biggest drop since the Black Monday crash of 1987 Thursday as fears of economic fallout from the coronavirus crisis deepened. The sell-off sent the Dow industrials down 10%. WGVU spoke with Paul Isely, Associate Dean in the Seidman College of Business at Grand Valley State University who tells us traders are fearing the worst - and preparing for the worst - until signs of positive news emerge.
“We've seen that in 2001. We've seen that in 2008 and it's not moving with what the data says at this point. It’s animal spirits at this point.”
What does the data tell us?
“Well, the data says hey, you know, the supply chains have been disrupted. People aren’t buying some types of things, they’re buying other things, and we have a travel industry and a hospitality industry that's going to be substantially affected. That's not a 25% drop in the value of our companies. That’s a few months of pain economically.”
Knowing that, do you see a rebound? Do you see more of this as we get through this first wave and then you see a rebound because we've seen markets over correct and then incorrect.?
“It's hard to tell when things will pop back, but at this point we talked at the beginning of the year about the markets had gone past where fundamentals would suggest on the good side. They're now getting past what fundamentals might suggest and the bad side. So, it suggests that we might overshoot more. We're certainly going to have volatility. The news cycle is such that people are reacting to the news of the day and that's going to create a lot of volatility.”
Paul Isely, you’re associate dean at the Seidman College of Business at Grand Valley State University. Thank you so much. All right.