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SUMMARY
The stock market witnessed a major sell-off on 9th March and has continued its downward spiral since then.There were two distinct trends driving the sell-off. Firstly, the increasing number of Coronavirus cases in the U.S and other countries outside China is causing mounting concerns of a global economic slowdown. Secondly, a sharp decline in crude oil prices after Saudi Arabia increased production in a price war with Russia.Goldman Sachs (NYSE: GS) stock fell 8% over the last 5 trading days (March 9-March 13) and is down by a total of 25% since early February, considering the impact that the outbreak and a broader economic slowdown could have on the consumer activity.The company generates around 59% of its revenues from its investment banking and sales & trading business, which could get negatively impacted due to lower consumer activity levels.Further, as the economic condition deteriorates, it would become expensive for the bank to attract funding.However, going by the trends seen during the 2008 economic slowdown, Goldman Sachs stock will likely bounce back strongly and potentially outperform the market as the crisis winds down.In this analysis, we take a look at how the company’s stock reacted to the economic crisis of 2008 and compare its performance with the S&P 500.
2020 Coronavirus/ Oil Price War Crisis
Timeline of 2020 Crisis So Far
12/12/2019: Coronavirus cases first reported in China1/31/2020: WHO declares global health emergency.3/9/2020 to 3/12/2020: S&P 500 sees 17% drop over 4 days, as U.S. cases accelerate and oil prices crash, amid Saudi led price war.
Goldman Sachs Group Inc Performance During 2020 Coronavirus/Oil Price War Crisis
Goldman Sachs stock declined by about 8% since Monday, March 9th (through March 13) and the stock is down by about 25% since February 1, after the WHO declared a global health emergency.In comparison, Morgan Stanley, which is a investment bank, saw its stock fall by about 28% since early February and by about 10% since Monday (through March 13). View our analysis for Morgan Stanley here:
2007-08 vs. 2020 Crisis Comparison: How Did Morgan Stanley Stock Fare Compared with S&P 500?
GS Stock: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
S&P 500 Index Performance During 2020 Coronavirus/Oil Price War Crisis
On the other hand, the S&P 500 declined by 9% over the last 5 trading days (through March 13) and has fallen by 19% since February 1, after the global health emergency was declared by the WHO.
S&P 500 Index: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
2007-08 Financial Crisis
Timeline of 2007-08 Crisis
10/1/2007: Approximate pre-crisis peak in S&P 500 index9/1/2008 - 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)3/1/2009 - Approximate bottoming out of S&P 500 index1/1/2010 - Initial recovery to levels before accelerated decline (around 9/1/2008)
Goldman Sachs Group Inc Stock Performance Over 2007-08 Financial Crisis
GS stock declined from levels of around $189 in October 2007 (the pre-crisis peak) to levels of around $78 in March 2009 (as the markets bottomed out) and recovered to levels of about $146 in early 2010. Through the crisis, GS stock declined by as much as 59% from its approximate pre-crisis peak. This marked a sharper decline than the S&P which fell by as much as 51%.However, the stock recovered strongly, rising by 87% between March 2009 and January 2010. In comparison, the S&P rose by about 48% over the same period.
GS Stock: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
GS Stock: Cumulative % Change from 10/1/2007
S&P 500 Performance Over The 2007-08 Financial Crisis
The S&P declined from levels of around 1540 in October 2007 to levels of around 760 in March 2009 and recovered to levels of 1120 by January 2010. Through the crisis, the S&P declined by as much as 51% from its approximate pre-crisis peak.
S&P 500 Index: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
S&P 500 Index: Cumulative % Change from 10/1/2007
Related Analyses
2007-08 vs. 2020 Crisis Comparison: How Did Goldman Sachs Group Inc Stock Fare Compared with S&P 500?
2007-08 vs. 2020 Crisis Comparison: How Did Goldman Sachs Group Inc Stock Fare Compared with S&P 500?
2007-08 vs. 2020 Crisis Comparison: How Did Goldman Sachs Group Inc Stock Fare Compared with S&P 500?
2007-08 vs. 2020 Crisis Comparison: How Did Goldman Sachs Group Inc Stock Fare Compared with S&P 500?
2007-08 vs. 2020 Crisis Comparison: How Did Goldman Sachs Group Inc Stock Fare Compared with S&P 500?
Goldman Sachs Group Inc - GS
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