Unless economic data hold an upside surprise, traders can expect more volatility in the market in the days ahead. The economic consequences of coronavirus are still largely unknown, which will likely keep a lid on a prolonged stock market rally.
As CEO of Pepper International Carol Pepper says,
this rally can’t be trusted as along as Covid – (cases are still on the rise:
We still need to see a slowing of the virus cases and a peaking in the US, because until then we’ll have these huge relief-rally days – then we’ll get a scary day and the market will plunge down again
Scary Days. are Coming for US Stocks
The scary days that Pepper is referring to are coming, especially as Donald Trump encourages the resumption of normal life sooner than anticipated.
Even if the U.S. carries on with its lockdown measures, the virus is likely to continue spreading at an alarming rate. That’s because travel in and out of New York, the worst affected state, has been largely unrestricted up until this point.
Coronavirus has hit New York the hardest but measures to contain it have been too little, too late. | Image: AP Photo / Mark Lennihan
New York is on par with Italy,
whose lockdown has been in place for several weeks now.
Travel in and out of Italy is severely restricted and has been over the past few weeks. People who traveled to Italy were told to self-isolate as early as February when the number of cases were less than half of where they are now.
In New York lock down measures have only just begun. On Tuesday, the White House asked people who’ve been in New York City
to self-quarantine . History Says Another Stock Market Crash is Coming
As hedge-fund manager David Tepper put it, “there’s nothing wrong with nibbling” at stocks right now as long as you understand the risks.
History Shows that the stock rally on Tuesday will
probably be short-lived . Back in , the S&P (made its way) . 6% higher in just one day. The index saw another 19. 8% rise on Oct. 50. Five months later, the S&P (had lost another) % .
If that’s anything to go by, the next few weeks will be packed with dead-cat bounces and falling knives.
(The) market crash had plenty of ups and downs before finally bottoming. | Source: Yahoo Finance
As the economic impact of coronavirus becomes more clear, investors are likely to start panicking again. This time central bankers and government officials won’t have any tools left to ride to the rescue.