The coronavirus pandemic is reportedly showing signs of stabilizing, and people are hoping this is the beginning of the end, which reflects on the markets. Has the stock market recovered from the coronavirus slump? Do you think that the present run-up in the market shows we are out of the woods?
5-Week High for the Stock Market
With the stock market hitting a 5-week high, the S&P 500 has reported daily swings in the region of 3% or more, MarketWatch reports. These swings are the highest for the index in over a decade. And on Tuesday, the S&P 500 reported the 38th session gain this year of at least 1%. This surpassed the total of last year. Many of the zero commission trading broker dealers are seeing an increase in trading volume.
This is an indication that US stocks are on the path to recovery. States are looking to the economy reopening. And the earnings season has also started. Tuesday was the most conspicuous example of this recovery. But one can observe that the market affected by coronavirus is also the most prominent example of volatility since the financial crisis of 2007-2009.
The Rise of the Major Indexes
On Tuesday, the S&P 500 was up 3.06% or 84.43 points. It closed at 2,846.06, which is the highest level for the index since March 10. Dow Jones Market Data reveals that the 3% move is the 23rd such move for the index in either direction. It matched such moves in the whole of 2009. It was also the 38th 1% session gain of 2020, which surpassed the total of 2019.
The Nasdaq Composite Index (COMP) also experienced gains of nearly 4% as a result of gains by tech giants Amazon ($AMZN), Alphabet ($GOOG, $GOOGL), Netflix ($NFLX) and Tesla ($TSLA). These gains helped Nasdaq exit the bear market after its entry on March 12.
Bullishness Returning to the Market
So, the bullishness is returning to the market. It took a beating last month, when coronavirus fears and ambiguity regarding its future rocked the markets. Now there are hopes that the worst part of the pandemic has passed, with the affected states in the United States and various nations of the world looking to restart their businesses and commercial operations.
These are 10 states that make up almost 38% of the American economy, Marketwatch reports. They have planned to reopen businesses. Some parts of Europe have also seen Covid-19 cases plateauing. All these have resulted in global equities rising.
Impressive Rebound for the Market
The US stock market’s bounce back from its low on March 23 may seem impressive, but some analysts believe this optimism is on the basis of a “wrong question” being asked by investors. What’s that wrong question? It’s about when economies get back to work. On the other hand, some analysts believe the right question to ask is when can we see aggregate demand recovering to the levels prevalent before coronavirus. That’s a difficult question to answer, and analysts believe that if that had been asked there would not have been such a rebound in the US stock market.
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