2020 stock market crash

Detailed article on the 2020 stock market crash

The 2020 stock market crash was a major and sudden global stock market crash that began on 20 February 2020 and ended on 7 April 2020. The crash was the fastest fall in global stock markets in financial history and the most devastating crash since the Great Depression.

Background

The crash was primarily caused by the COVID-19 pandemic, which led to widespread economic disruption as countries implemented lockdowns and other measures to contain the virus. The pandemic caused a sharp decline in consumer and business activity, leading to fears of a global recession.

Timeline

February 2020

On 20 February 2020, stock markets around the world began to decline. The Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ Composite all fell sharply. By the end of February, the DJIA had fallen by more than 10% from its peak, entering correction territory.

March 2020

The decline continued into March, with the DJIA experiencing its largest single-day point drop on 9 March, falling by 2,013 points. This day was dubbed "Black Monday". The market continued to fall, with further significant drops on 12 March ("Black Thursday") and 16 March ("Black Monday II").

April 2020

By early April, the markets began to stabilize as governments and central banks around the world announced unprecedented fiscal and monetary stimulus measures to support the economy. The Federal Reserve in the United States cut interest rates to near zero and launched a massive quantitative easing program.

Causes

The primary cause of the crash was the COVID-19 pandemic, which led to a sudden halt in economic activity as countries implemented lockdowns. Other contributing factors included:

• Oil Price War: A price war between Russia and Saudi Arabia led to a sharp drop in oil prices, further destabilizing markets.
• High Valuations: Prior to the crash, stock markets were at historically high valuations, making them vulnerable to a correction.
• Global Supply Chain Disruptions: The pandemic caused significant disruptions to global supply chains, affecting production and trade.

Impact

The crash had a significant impact on the global economy, leading to:

• Recession: Many countries entered recession as a result of the economic slowdown.
• Unemployment: Unemployment rates soared as businesses closed or reduced operations.
• Government Debt: Governments increased borrowing to fund stimulus measures, leading to higher levels of national debt.

Recovery

The recovery from the crash was uneven, with some sectors and countries rebounding faster than others. The technology sector, in particular, saw a strong recovery as remote work and digital services became more prevalent.

Also see

• COVID-19 pandemic
• Great Depression
• 2008 financial crisis
• Federal Reserve
• Quantitative easing