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Has the Stock Market Moved On From COVID-19?

Has the Stock Market Moved On From COVID-19?

Historically high unemployment, a steep economic downturn and a grim milestone reached in terms of COVID-19 deaths – the bad news keeps rolling in, and yet, the stock market has rallied through April and large parts of May, recovering much of the losses incurred in the early weeks of the pandemic.

During March 2020, global stocks saw a recession of a minimum of 25% and 30% in most G20 countries. On 20 March, Goldman Sachs advised that the US GDP would shrink 29% by the end of the second quarter of 2020, which joblessness might increase to at the very least 9%.

This chart shows the year-to-date performance of major U.S. stock market indices as of June 10, 2020.

The Dow Jones Industrial Average eclipsed 25,000 points for the first time since the previous March, and also by the beginning of the adhering to month, the S&P 500 eclipsed its 200-day relocating standard while the NASDAQ-100 rallied 42% from the 3 indices newest regional minimum on 23 March. The rally was inspired by information of prospective coronavirus vaccines and economic recuperation, but many financial experts have advised that maybe a “bear market trap” and also in June, long-short energy will plummet at similar degrees seen in 2002 and also 2008 which worldwide markets might remain to crash into July.

“The gap between markets and economic data has never been larger,” Matt King, global head of credit strategy at Citigroup wrote in a recent note, adding that he considers a V-shaped return to normal as extremely unlikely.

As the following chart shows, all three major U.S. stock market indices bottomed out on March 23, when the number of confirmed COVID-19 cases in the U.S. stood at 43,000. Since then, the outbreak has taken a significant turn for the worse, infecting 2 million Americans and killing more than 112,000 as of June 10.

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