Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
After the FED, Treasury and key persons in the American government made a hefty of clean, effective moves, the stock market looks much better.
Despite the scary expectations of the majority of the traders, coronavirus hasn’t put the Dow Jones Industrial Average on the knees. Contrary to that, the index has started a recovery, making the 20,000 points a level of strong support. All thanks to the rescue funds which will be sent to the economy by the Fed. Officials have decided to cut rates, invest in a wide range of stocks, bonds, and even Treasurys, and put money into the small and middle business.
Still unknown the precise number of victims within the U.S. Per Michael Arone, chief strategist at State Street, the market will have to wait for the last data about coronavirus spread. Same thoughts shared by Jonathan Golub, chief U.S. market strategist at Credit Suisse:
“The truth is the market is going to bottom when the number of cases starts to peak. Between now and then, you’re left with volatility. The most important day I think is the day we’re going to have no increases in the number of new illnesses. The second most important day is going to be this Thursday. The expectations are between 2 and 2.25 million people [will file claims], so this week is expected to be three times worse than the worst week in the financial crisis.”
During Tuesday, the Dow has bounced up by 11%, after one of the best days since 1933 depression. Congress is moving closer to adopting the new set of laws sending a stimulus package to the market. The S&P 500 index performs a rally right to 2,447 points. This is 9,4% percent more than yesterday.
Experts Claim Virus Still Rule the Market
Per Peter Boockvar, who works at Bleakley Advisory Group as chief investment officer:
“This 2,300 to 2,400 level has been an area that is finding some buyers. That’s the December 2018 low. We broke it for a couple of days, but this is where the market is trying to find some traction. I think the market has priced in the very short-term bad news. We know the patient counts are going to spike over the next two or three weeks.”
Boockvar found that the virus will give the market its main trend no matter what. They think it’s going to take a month or two before the picture becomes more clear. Experts are sure that this current level is not the bottom. Americans must prepare for a much worse situation.
Robert Sluymer from Fundstrat claims that this is exactly the start of the bottoming process. The internal market indicators show that the fall is imminent:
“The extreme selling pressure and market structure stress that developed in March is likely subsiding and an internal low has likely developed.
While it’s premature to conclude the final lows are in for the market, a bottoming process has likely begun, and we expect to see more positive divergences developing into late April and mid Q2 consistent with a bottom in our intermediate-term indicators”
On March 13, already having the name of ‘Bloody Friday’, the stock markets lost too much, as well as crypto. Many of the investors were panic selling their stocks and coins. Some want to hedge risks, some want to buy food for quarantine. T-Shirts are very popular all across the Web, with a ‘Quentin Karantino’ and ‘Quentin Quarantino’ prints.
Unemployment Rate Is Increasing Hard
John Briggs, from NatWest Markets, thinks that the Fed made a good job at making the markets rolling:
“I think it’s dangerous to call a bottom. When unemployment prints at 3 something million on Thursday, I don’t know how the market is going to handle it. Front end credit was where the stress is. There’s been some easing in anticipation of having a buyer of last resort.”
The future will become more clear after the pandemic increases its influence over the States. As per now, the picture looks very difficult, with a growing number of contamination cases around the country. Many of the experts are calculating the possible outcomes using the data from Italy, China, Europe, and some other places.
Golub is expecting that the corporate earnings will lose more than 40% by the middle of the year. Thus, heading to a sharp reduction of 24% yearly income per 2020.