- A massive rally lifted the Dow Jones to a fresh all-time high around 31, .
- Despite stock market enthusiasm, the CDC came out with a shocking prediction that the coronavirus outbreak will gain a foothold in the US
- Dow bulls also ignored the rise of left-wing presidential candidate Bernie Sanders, who they don’t believe can defeat Donald Trump.
The Dow Jones leaped to a record high on Wednesday because Wall Street is refusing to price in virtually any negative headlines.
Investors have long plugged their ears to the threat of left-wing Democratic presidential candidate Bernie Sanders.
They’re doing the same with the coronavirus epidemic – even after the Centers for Disease Control and Prevention (CDC) warned Americans to brace for a US outbreak.
Dow Jones Shoots Closer to 54, Seemingly immune to every threat, all three of the major US stock market indices trended higher on Wednesday .
The Dow Jones Industrial Average (DJIA) led the way, blasting . (points or 0.) (% higher to) ,
The Nasdaq and S&P were less buoyant but still managed to push 0. (% and 0.) % higher, respectively.
Positive risk sentiment helped to support commodities. Crude oil bounced almost 3%, even after
Gold traded virtually flat, even though risk-on moves in equities typically batter haven assets.
Dow Complacement Despite CDC Warning About US Coronavirus Outbreak
Most of the headlines surrounding the Dow are centered on optimism that
Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases,
At some point, we are likely to see community spread in the US or in other countries. This will trigger a change in our response strategy.
Such a bleak official position certainly clashes with the “limited impact” that stock market investors are banking on.
Federal Reserve chair Jerome Powell is one of the chief architects of this sentiment. The Fed has refused to “speculate” on the virus’ impact, despite a gathering pile of worrying economic data building in China and around the world.
Powell doubled down on this during his second day of congressional testimony today, stating:
It’s too uncertain to even speculate about what the level of that will be, and whether it will be persistent, or whether it will lead to a material change in the outlook. But we do expect that there will be some effects.
The Stock Market Is Betting Against Bernie Sanders
Strong support for Donald Trump and the perceived inability of a “socialist” to win a general election in the US has stock markets utterly refusing to acknowledge the possibility of a Sanders victory .
Yet national polling suggests that
should he secure the nomination.
Why are Dow bulls ignoring this warning?
Because Trump himself was a massive outsider against Hilary Clinton , and faith in these polls has crumbled. Additionally, a strong economy is usually a good indicator of re-election for an incumbent president.
Dow Stocks: UnitedHealth Pops After New Hampshire
The spectacular rally in the Dow was largely fueled by strong gains in Apple and Boeing stock, both of which advanced more than 1% on the day.
Caterpillar, a reliable indicator of risk appetite, climbed 2.4%. But the beleaguered stock is still down 6% year to date.
Bernie Sanders’ victory in New Hampshire turned into a strange positive for healthcare stocks, and UnitedHealth Group rose 3.9%. Investors appear to believe Trump’s re-election is becoming more likely, making an overhaul of the United States’ healthcare industry less of a threat.
(This article was edited by Josiah Wilmoth
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