In early 2020, it became clear that the novel coronavirus (COVID-19) was going to create a serious problem for the global economy. The question for many U.S. investors was more localized: How would it affect Wall Street’s historic run upward under the presidency of Donald Trump?

At the end of February, it appeared the virus was forcing a bleak outlook, largely because of apparent disconnects between Centers for Disease Prevention and Control (CDC) messaging and that of the White House. Then, the market went into freefall, joining global equity markets in wiping out $7 trillion from levels posted in mid-February. Although Wall Street, specifically, appeared to be stabilizing by the beginning of March, it remains to be seen what effect the spread of the virus in the United States will have on the presidential election and the U.S. economy. 

Moody’s Analytics Mark Zandi warned on March 1, 2020, that Wall Street was “dangerously underestimating the magnitude of a recession” and placed the odds at “at least even.” However, by March 2, 2020, stocks were rising once more, and Asian indexes has closed higher at the end of the trading day. 

Analysts say a key factor in how the markets respond in the United States to the coronavirus will be how much room the Federal Reserve appears to have in which to maneuver and insulate the economy from a recession. Another issue will likely be whether public and investor perception defines the virus in the U.S. as a “pandemic” even if it does not meet the technical definition.