By
Temitope Olatunji
April 26th, 2024
The slowing number of new COVID-19 cases got the markets to cheer on Monday with a major rally. However, analysts are questioning the sustainability of this recovery with economic indicators showing a dark picture.
With the perpetuating uncertainty around the Coronavirus pandemic, the global markets continue to remain volatile. In a sharp and surprising recovery on Monday, Dow Jones jumped 8% or 1600 points to climb above 22,500 levels.
As of Monday closing, Dow Jones was trading at 22,680 levels. Similarly, the S&P 500 also jumped 7% or 175 points on Monday, registering its best day in the last two weeks. Some experts think that the rally comes amidst the slowing number of COVID-19 cases in the U.S.
With America being the worst hit, the total coronavirus cases in the country have jumped to over 367,000. But Sunday witnessed a slowdown in new cases from its previous days. President Donald Trump also briefed the press about the situation and the progress with coronavirus treatment. He said:
“Currently, ten different therapeutic agents are in active trials and some are looking incredibly successful. But they have to go through a process and it’s going to be a quick process based on what the FDA told me.”
Sam Stovall, chief investment strategist at CFRA Research in New York, suggested that the markets are in a mood that ‘this-too-shall-pass’. Stovall said:
“Seeing the market soar the way it is, even though the fundamentals continue to be in free fall, the market is looking across the valley and saying ‘six months from now things will be on the ascent. They are looking across the valley and seeing a lot of scary news but are basically saying ‘We will get past this.”
But it is too early to say anything at this stage whether this is the start of the recovery. The Dow has remained volatile over the last few weeks and economic indicators are not supporting the markets.
Economy Shows Dark Pictures but Dow Jones Is Getting Points
Economic experts around the globe have been stressing that we are heading towards a global recession and this is just the beginning. The total number of jobless people in the U.S. has already reached its peak and the number is expected to go to 5 million.
Wall Street banker and JPMorgan boss Jamie Dimon believes that recession is on the horizon. Art Cashin, longtime NYSE trader also thinks that it will take a minimum of two-to-three quarters for the economic recovery to begin. Speaking to CNBC, Cashin said:
“It looks like a longer recovery to me. You can hear it in the president’s voice and presentation, you can hear it from Gov. Cuomo. They all want to reopen, but they are all hesitant for fear that there could be a secondary wave of contagion.”
He further added:
“The question is, will the public be eager to rush back? Even people like you and me, who love to go out and socialize, it might be difficult to get that back any time soon. Will they come back? Yes. Will they come flooding back the day after they say you can relax social distancing? No. So the chances of a bounce back are there, the chances of a rapid bounce back are low.”
While the Dow Jones ended Monday on an 8% rally, the stock futures have open lower today on early trading hours.