- The Dow’s recovery come to an end on Friday as the United States becomes the most-infected country in the world.
- Now that the coronavirus stimulus package has been absorbed, the Dow has little in the way of the catalyst to fuel a sustained rally.
- Profit-taking will likely erase most of this week’s gains.
The stock market made its way out of bear territory this week after three consecutive days of gains. But Dow Futures pointed to a lower open on Friday as a worrying spike in U.S. coronavirus cases threatened to erase this week’s historic gains.
Coronavirus Worries Keep a Lid on the Dow’s Rally
The US overtook China to report the most confirmed coronavirus cases in the world late Thursday. Donald Trump brushed the label off, claiming it can be attributed to the U.S. improved testing.
I think it’s a tribute to the testing, we’re testing tremendous numbers of people.
Cases in the US are only expected to rise as unrestricted movement between cities make it difficult to contain the virus.
While the government $ 2 trillion stimulus package eased fears of a total economic meltdown , it did little to calm worries about an unmitigated coronavirus outbreak across the US
The majority of Americans believe the stock market hasn’t bottomed yet, an Allianz Quarterly Market Perceptions study shows. That suggests profit-taking is on the horizon as investors try to book gains ahead of the disastrous economic data that’s certain to come in the weeks ahead.
Gregory Faranello of AmeriVet Securities
I wouldn’t necessarily take the price action in the risk markets right now to be a true reflection that this is over. This is going to be an economic fallout. We’re seeing in two weeks what we would normally see maybe in a year and a half or two years.
Dow Takes A Breather With Stimulus Vote Ahead
The Dow Jones Industrial Average (DJIA) has been helped tremendously by the promise of an unprecedented coronavirus stimulus relief package that made its way through the Senate earlier this week. But questions about when the aid will become available and which industries it will help put a damper on excitement over the aide
.
The House of Representatives is due to vote on the bill at 9 AM ET. The relief package is expected to see unanimous support, but the format of the vote could delay its passage. Some worry that House members
Powell’s Remarks Dismissed
Federal Reserve Chairman Jerome Powell gave investors more to cheer about on Thursday when he confirmed the US central bank had more tools left in its arsenal
to keep the economy afloat. His comments helped prop up the Dow’s impressive rally, but investors had all-but dismissed his reassurance by Friday morning. (
When it comes to this lending, we’re not going to run out of ammunition, that doesn’t happen. We still have policy room in other dimensions to support the economy.
But even Powell himself noted that the bank will be most helpful once the spread of coronavirus is under control. With the number of U.S. cases rising at an alarming rate, investors seemed skeptical that the bank would have that opportunity anytime soon.
This article was edited by Samburaj Das
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