After hitting a 42.91% return in 12 months in late October, the S&P 500’s annual return plunged to 23.18% a month later. Now, while this isn't necessarily a strong indication of an impending bear run as the S&P 500 hit a 56.35% annual return in March and fell to 17.99% four months later, there is a peculiar reason for the recent drop. Besides the S&P 500, after hitting this year’s record of $1,222.91 in early November, TSLA closed at $1,017.23 on December 11.
It wasn’t just the S&P 500. Stock markets worldwide took a hit after the Omicron variant was first detected in November. Although APPL has hit a record for the year, other shares are literally still struggling to get back up. So, yes, the Omicron variant shook the stock market, but what else should we expect in the coming days, weeks, and months considering these factors: Analyzing the COVID-19 impact on the stock market to look for similar outcomes;
The threatening nature of the Omicron variant; The current mindset of individuals who are increasingly getting tired of the never-ending situation of the pandemic; Now, let's see what experts in the industry have to say about the new virus impact on the stock market. In November last year, a share of TSLA cost $400, though after a 5-1 split. Fast Forward to a year, a share is worth over $1,000 after losing some of its value. This présente a buying opportunity for investors Before discovering the new virus, TSLA was going on a fast bull run, which may demand another stock split soon enough. Greg Bassuk, CEO of Axs Investments Port Chester, and Jack Ablin, the Chief Investment Officer at Cresset Capital Management, both agree that the new virus has opened a buying opportunity similar to last year's charade, as we saw with TSLA.
Another factor to consider is how the new virus is handled. Edward Moya, a senior market analyst at Oanda based in New York, says that “...if this variant concern continues to dominate the headlines, then you’ll start to see the dollar resume its safe-haven trade.” Unfortunately, it hasn't been quite the case... Riots broke out for days across Europe, Belgium, Netherlands, Croatia, Austria, and Italy, as governments sprung up anti-COVID-19 measures to control the spread of the new virus.
Fewer people are worried about the new virus, and that’s not so good for the stock market, according to Moya. Yes, the new virus provides a buying opportunity. And yes, how we handle the virus may be good or bad news for the stock market. However, all of these are speculations. TSLA may keep plunging downward, so will the S&P 500. Currently, everything may go right for the stock market, and everything could also go wrong. While the market has always recovered from every hit, each of those situations occurred differently. For instance, NIO shot up 2400% during the heat of the pandemic.
However, Rivian Automotive Inc recorded a net loss ranging from $1.18 billion to $1.28 billion. Same industry, same situation but different outcomes. Peter Rutter, Head Of Equities at the Royal London Asset Management, asserts that the new virus impact on the stock market would have many outcomes that we cannot possibly pinpoint. All we do now is speculate. There is no doubt that the new virus will affect the market one way or the other. Should we do this or that, bearing in mind that everything could go haywire? That’s something you have to think about while evaluating your investing strategy. There is always a rebalancing of our portfolios to consider. Despite the complexities surrounding the new virus impact on the stock market, there is one takeaway, more of a consolation: the stock market has always recovered from every historical hit we will overcome it for sure
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