Wednesday marks the first day of the second quarter amid the COVID-19 pandemic, what one market executive sees as a challenging time that may have been mitigated from actions by the Federal Reserve and the U.S. government.
With unprecedented figures such as the Federal Reserve Bank of St. Louis predicting unemployment to rise to 32 percent representing 47 million jobs lost, Tal Cohen, executive vice president and head of Nasdaq's North American Markets, told Cheddar Wednesday that the markets grasping how to function during the outbreak.
"Investors are beginning to understand the contours of this crisis and have been encouraged by the Fed and the government's actions that have lifted some of the uncertainty for the markets," Cohen said.
The Nasdaq saw heightened volatility in the options market beginning in the middle of February but it has come down a bit since then, according to Cohen. "We see less dislocation, less gapping in both equities and options over the last week," he said. "We closed down our floor on the options side, and we haven't seen a degradation of liquidity. And that speaks to our ability to run those markets fully electronically."
Last week, President Trump said he wanted to reopen the economy by Easter but on Tuesday night the White House revealed estimates of between 100,000 and 240,000 deaths in the next few weeks from COVID-19, compelling the administration to extend its social distancing guidelines. While Cohen said the markets will have to absorb unprecedented numbers like such a death toll or the unemployment figures, he expressed a belief that the federal government is capable of blunting the fallout.
"I think the markets will be tested in terms of their ability to process this information and make sense of this information. I think what's helped is what the Fed has done and the government has done, and I think it signals to the market they will do whatever is necessary," Cohen said.