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The Dow Jones Industrial Average made its official entrance into a bear market on Wednesday after the World Health Organization declared the novel coronavirus a global pandemic and aggravated investor anxiety that the disease would undermine economic growth.
The blue-chip index on Wednesday closed more than 20% below the record close that it notched less than one month ago on Feb. 12. The S&P 500, the more widely tracked index among investors, managed to hover just above bear market territory by the close of trade, but remained more than 19% below its own all-time high.
But amid the Wall Street bloodbath, Goldman Sachs took some relief in the fact that the current market rout appears event-driven, or triggered by a specific catalyst.
David Kostin, Goldman’s chief U.S. equity strategist, wrote in a note to clients that when specific events spark bear markets, stocks’ recovery tends to be stronger than it otherwise would be. That could bode well for investors if the new coronavirus proves to the main reason behind the sell-off and only hurts economic growth for a few months.
Originally published at CNBC