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Coronavirus Ends 11-Year Bull Market Streak as Firms Shore up on Cash, Credit Lines

March 12, 2020, 09:10 AM
Filed Under: Economy

The Dow Jones industrial average dropped another 6% on Wednesday, sending the stock market into the first official bear market in more than a decade. Meanwhile, uncertainty about what global responses to the viral outbreak will do to capital markets has U.S. companies scrambling for last minute cash and drawing on credit facilities.

“If the Trump administration and Congress can’t get it together quickly and put together a sizable and responsible package, then a recession seems like a real possibility here,” said Mark Zandi, chief economist for Moody’s Analytics. He said he saw a roughly 50 percent chance of a recession in the next year.

According to The New York Times, Boeing Co is planning to draw down the rest of a $13.8 billion loan it agreed last month, with airlines facing significant stress from travel disruptions. And Hilton Worldwide Holdings Inc said in a regulatory filing on Wednesday it was planning to draw down the remaining available amount under a $1.75 billion revolving credit line.

According to Mark Zandi, chief economist for Moody’s Analytics, quoted by the Times, there is a 50% chance the virus could lead to a full blown recession.

“If the Trump administration and Congress can’t get it together quickly and put together a sizable and responsible package, then a recession seems like a real possibility here,” he said.

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