Did the coronavirus keep the stock market from taking an even bigger hit? – MarketWatch

The Dow Jones Industrial Average DJIA, -0.41% turned in an historically awful first quarter, shedding almost a quarter of its value as the coronavirus spread around the world and took its toll on the U.S. economy. It felt like it was just the beginning.

Then came the Federal Reserve.

With the central bank flooding the zone with monetary stimulus, the stock market has rebounded remarkably well, considering the complete implosion of the economy.

That has Jake from the EconomPic blog pondering this scenario:

The coronavirus has actually helped the stock market?

Sounds crazy… but is it?

Judging from the reaction of Jake’s 24,000-strong Finance Twitter TWTR, +0.34% following — it was hailed as “the tweet of the day” — it’s a question worth asking.

“All else equal no lower oil, no lower rates, no aggressive Fed, no stimulus… who knows,” The Long View responded. “Flash crash was happening either way IMO though given positioning.”

To Jake’s point, even before the coronavirus market crash, there were signs of cracks in the stock market. The bears were at full throat calling for the end of the 11-year-old bull market. Valuations were running hot, and political uncertainty was weighing heavily ahead of the stretch run to the 2020 election. There was obviously a strong case to be made for a drop in stocks.

But here we stand, the Dow is down about 14% and the S&P 500 SPX, -0.77% is only off about 9% this year. That’s some staggering resiliency for a market that many believed was already top-heavy and destined for at least a slowdown, if not something more painful,.

So, did the coronavirus keep this market from getting hit even harder?

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