TL;DR: The world’s psychological benchmark, the Dow Jones Industrial Average (DJIA), slid beneath 20,000 as equities continue to be routed even as governments all over the world fire up fiat money-printing schemes. Nearly at the same time, the Big Board announced closing its trading floors and opting for fully electronic trading.
Dow Jones Industrial Average Drops Below 20,000
The Dow Jones Industrial Average is weighted from 30 companies listed principally on exchanges such as the NYSE and Nasdaq. The 30 change or adjust infrequently but represents a financial thermometer of the world’s most prosperous economic engine, the United States. Companies chosen range from finance to fast food, airline manufacturing and oil, to entertainment and of course tech.
Logarithmically, the DJIA shows a rather steady upward trend since its founding in 1896, 135 years ago. However, more recently, it has started to flatten. The en vogue excuse is a pandemic brought about by coronavirus, making its way through supply chains, wreaking havoc. At the market’s close just hours priors to publication on March 18, 2020, the DJIA slipped another 1,300+ points, breaking the psychological 20,000 barrier only weeks after some analysts assumed it would soon hit a historic 30,000.
That sub-20,000 level is a haircut retracing the DJIA back to just after Trump’s taking office in 2017. Perhaps more unnerving is the present administration’s string of using central bank and Treasury tools to provide liquidity, offering bailout packages in the high hundreds of billions, a credit guarantee of $1.5 trillion, and more quantitative easing seemingly by the day (the latest round is a half-billion dollars on top of a dizzying array of financial stimuli).
NYSE Equities and Options Trading Floors Will Close
It’s worrisome, at least as of the present moment, because the market appears to be rejecting the above as not enough to stem the inevitable: fewer folks employed, fewer still without discretionary income, and the cascade effect of those two facts upon a service-based consumer economy. The legacy economic engine of the world is slowing by nearly any measure.
Amidst it all, the marquee US exchange, the NYSE, known as the Big Board, revealed it was ceding to coronavirus concern as a practical matter. Noting in its press release today “trading and regulatory oversight of all NYSE-listed securities will continue without interruption,” parent company Intercontinental Exchange (ICE) “announced today that the New York Stock Exchange will initiate its business continuity plan (‘BCP’) and move, on a temporary basis, to fully electronic trading on Monday, March 23.”
It comes after Trump’s Treasury head assured the public markets would remain open for trading as a matter of policy. ICE called the move a “precautionary step,” noting, “All NYSE markets will continue to operate under normal trading hours despite the closure of the trading floors.” Meanwhile, the cryptocurrency world is watching developments keenly, underscoring its culture of digital nomads who operate exchanges all over the world, often from their homes or cafes. That, and, well, again for the moment, crypto markets appear to have flattened in terms of price, perhaps a small indication they might make attractive hedges during increasingly uncertain financial times.
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