U.S. stocks rallied hard on Thursday, as investors notice both that all forms of stimulus are momentarily holding over the struggling economy and that there is some indication the coronavirus may slow soon.
The S&P 500 rose 4.27% Thursday, with the Dow Jones Industrial Average rising 3.94%. Since lats Thursday, the S&P 500 is up 7%, as investors have recognized that monetary and fiscal stimulus may very well hold people, small businesses and companies over before hey become illiquid.
Still, the economy needs the virus to go away and there are some signs of that.
Poor economic data and uncertainty over the virus could also hold sentiment back.
Mark Haefele, Chief Investment Officer, Global Wealth Management, UBS:
"Our central scenario sees new infection rates in Europe and the US peaking around mid-April and the most severe restrictions start to be lifted from mid-May. Coordinated fiscal and monetary stimulus prevents a painful hiatus in economic activity from turning into a lasting downturn, resulting in a U-shaped recovery taking hold in the fourth quarter of this year. Investors may be encouraged by a fourth consecutive day of deceleration in the number of new virus cases in Italy, and the World Health Organization (WHO) suggests the peak will be surpassed by Sunday.”
Matthew Harrison, Head of Morgan Stanley's Biotech Industry Research
"We remodeled Italy on a regional level to better asses the outbreak dynamics. We see a sustainable decline in the increase in new cases in roughly 10 days and peak cases of roughly 150,000 in roughly 20 days.”
Anwiti Bahuguna, Head of Multi-Asset Strategy, Columbia Threadneedle Investments
"While many of these measures are lagging indicators, and may already be priced into markets, investor sentiment could still take a hit. There is still much data to come."
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