Lara Rhame, chief U.S. economist and managing director at FS Investments, examines current economic risks and resiliency, as well as potential further policy response, in light of COVID-19’s increased presence in the United States over the past week. Uncertainty is likely to remain heightened despite policymakers’ efforts at being proactive, meaning investors should brace for further volatility for months to come.
Even for investors who had already experienced two weeks of rocky markets, Monday was a brutal reminder of the devastation that volatility can wreak on a portfolio. The S&P 500 closed Monday down 18.9 percent from its high on February 19, just shy of the typical 20 percent threshold for a bear market. Nine months of market gains have evaporated in just under three weeks.
However, the policymakers are already taking action. The Federal Reserve’s March 3 interest rate cut was just the first move by t
