Wall Street's Brutal Week

By Ben Walsh |  Friday, March 20

Yiiikes. Well, that makes 9 out of 10. Yesterday's half-percentage point rise in the S&P 500 was a break from the previous eight consecutive days of 4%-plus moves.

But today was another manic day of 4%+ moves in the S&P 500. That means that yesterday's placid returns were the only thing resembling calm out of the last 10 trading days.

The S&P 500 finished down 4.3%, while the Dow Jones Industrial Average fell 913 points, or 4.6%, and the Nasdaq Composite dropped 3.8%.  

All in all, it was the worst week for stocks since October 2008, which you might remember as the time when the global financial system was on the verge of collapse. 

Now, there are very reasonable fears that the real economy is on the verge of – indeed, has already begun – falling apart with a speed and scope unlike anything since the Great Depression. 

New York State and California ordered massive restrictions for individuals and businesses, effectively telling 1 in 5 Americans that they need to stay inside in almost all circumstances. Jobless claims have already surged to 281,000 for last week. Economists expect the numbers for this week  to have hit 875,000, well above the record of 695,000 set on Oct. 2 1982.

And looking forward, things don't look as if they will get much better soon. Goldman Sachs' economists are forecasting second-quarter GDP to come in at -24% on a seasonally adjusted annualized basis.  While Goldman's forecast is a bit gloomier than others, things look bad all around: Evercore sees -20% GDP; Morgan Stanley expects -14%; Bank of America projects -12%. 

Those are the kinds of numbers that make a $1 trillion fiscal stimulus package look not just reasonable, but as just a reasonable place to start.

As we did yesterday, we'll end with one bright spot: The Federal Reserve is expanding its asset-purchasing program to include municipal debt. Cities are going to need to spend huge amounts to fight the disease outbreak itself and still more to help their citizens and businesses stay afloat. The Fed is sending them a clear message: You've got our support to borrow and spend.