The Trump-bubble is bursting: Coronavirus is only part of the problem with the stock market
President Donald Trump says the US has been involved in trying to resolve the crisis between Pakistan and India (AFP Photo/Manan VATSYAYANA)

As the coronavirus outbreak approaches global pandemic status, the financial markets started the week in the hole. In the case of the U.S. Stock Exchange, all of the gains for the year were erased in one day. But the cause isn't isolated to the deaths caused by the virus.


Axios reported Tuesday that the market tumble that President Donald Trump's precious economic bubble might be bursting.

Asset fund managers said coming into 2020 that the stock market would be less predictable, but would likely rise about 5 percent from the 2019 close.

"The most cited target was for the S&P 500 to end the year at 3300, a mark it had surpassed by Feb. 5," Axios said.

Treasury yields, or the return you get on major 10-year investments, has been falling since the start of the year too. "Yields on the 30-year bond falling to a record low Monday."

Investors bought into the idea that after Trump's trade war was resolved, everything would be fine.

"Despite warnings from economists that the U.S-China trade war could cause a global economic recession, investors have been buying rather than selling," Axios reported in May 2019. But the Trump tariffs made a huge impact, regardless of his reassurance. Stock traders, meanwhile, bought into the stability and claimed all was well, whether it will be or not.

At the National Association for Business Economics conference in Washington Monday, economists examined the idea of the coronavirus outbreak would cause a dramatic response to markets.

"Cleveland Fed President Loretta Mester just smiled and shook her head when I asked her about the market's nosedive during a cocktail reception last night," wrote Axios.

"It’s one day of a very strong reaction in the market," she said. "The Fed has to be forward-looking, and we have to just wait and see how things develop."

So, if the markets expected a slight dip from the threat of the virus, why was the so-called "dip" so significant? The opening bell was mere hours ago, but already the market is continuing its downward spiral, losing 200 points as of 10:30 a.m. EST.

Trump attempted to ease the markets by saying that he's increasing his request for funds to fight the virus after he significantly cut public health dollars, and trying to assure a nervous nation that the virus would be gone by April.

Read the full report from Axios.