What's going on with the Dow Jones?
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  What's going on with the Dow Jones?
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Author Topic: What's going on with the Dow Jones?  (Read 1486 times)
AGA
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Junior Chimp
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« on: February 24, 2020, 05:51:05 PM »

Lost 1,000 points today, and several hundred points yesterday. Is this because of Coronavirus?
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rosin
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« Reply #1 on: February 25, 2020, 06:26:53 AM »

The fat cats on Wall Street (as well as on other stock exchanges, the fall in prices is a global phenomenon) have finally found out that they might be severely impacted by the COVID-19.

This impact might happen in different ways:

1) Less demand from consumers (since a lot of people are quarantined)
2) Less supply, since factory workers are forced to stay home and factories are shutting down or producing much less
3) And most serious: Bottleneck problems. In the current globalized economy many products (both final and intermediate), parts and components, as well as raw materials, are produced far away, in other countries and regions than the final product. In fact, many CEOs and leader boards are likely not fully aware of what companies their businesses' supply chains pass through - and no (supply) chain is stronger than its weakest link.

Especially with the virus shutting big parts of China down, 3) gives problems, since a lot of production is taking place there, often without sufficient production facilities elsewhere.

And the more the virus spreads, the more will all three problems above worsen.
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