The Bottom, One Year On

One year ago today, the S&P 500 reached its closing low. The index shed one-third of its value in just 22 trading days.

The closing low was 2,237.40. During the day, the index got as low as 2,191.86.

Here’s some mathery. Measuring from the intra-day low, over the next three days, the S&P 500 gained 19.993%. The index is up more than 70% from last year’s low.

The big news one year ago today was that the Fed announced unlimited asset purchases.

The Federal Reserve said Monday it will launch a barrage of programs aimed at helping markets function more efficiently amid the coronavirus crisis.

Among the initiatives is a commitment to continue its asset purchasing program “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”

That represents a potentially new chapter in the Fed’s “money printing” as it commits to keep expanding its balance sheet as necessary, rather than a commitment to a set amount.

The Fed also will be moving for the first time into corporate bonds, purchasing the investment-grade securities in primary and secondary markets and through exchange-traded funds. The move comes in a space that has seen considerable turmoil since the crisis has intensified and market liquidity has been sapped.

The stock market crashed and roared back. Here’s another way of looking at the market (data may be incomplete).

Posted by on March 23rd, 2021 at 10:47 am


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