U.S. STOCK MARKET RALLY 'ELUSIVE,’ PLAYERS WARN
There is no reason why the stock market should be clinking champagne glasses over the market’s rally from lugubrious March 2020 lows, with four Wall Street experts saying it might be a mirage in the wake of “dismal economic reports, corporate profit warnings, and economist caution,” stressed Ben Winck of Business Insider in the early hours of May 18, 2020.
The S&P 500 is up 28% from its late-March low, while the Dow Jones industrial average has climbed 27%. And last week, Nasdaq composite erased its year-to-date losses and now is less than 6% from record highs, Winck wrote.
"Gravity is taking over" as markets begin to assess reopening risks and a second wave of virus cases, said Marc Odo, client portfolio manager at Swan Global Investments. He added that markets are largely underestimating how the once-in-a-century pandemic will prompt permanent change.
The second-wave risk was also ignored for psychological reasons, according to Rich Steinberg, chief market strategist at The Colony Group. “The markets are acting like we're going to flip a switch and be back to normal. But the economic reality is not there." For Seema Shah, chief strategist at Principal Global Investors, economic damage across industries risks a recessionary aftershock and second market tumble. While the 20.5 million erased payrolls highlight a dramatic job-market toll, the 18.1 million Americans who reported their job loss as temporary will serve as a critical indicator moving forward, Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, said. If that population is unable to reenter the labor market, look for asset prices to react poorly. #coronavirusimpact #COVID19