- The stock market rallied again today.
- Many think the surge was caused by Bernie Sanders dropping out of the presidential race.
- But the market has been rallying for days, based on hopeful news that the COVID-19 pandemic is peaking.
Against all odds, the stock market surged ahead yet again today. As unemployment continues to break records, and the housing market threatens to buckle, the stock market is somehow thriving.
Many analysts seem to think it’s because Bernie Sanders pulled out of the presidential race today, but that doesn’t explain this three-day rally. It appears though the COVID-19 pandemic may have reached its peak, for now.
Social Distancing Appears to Be Working
Promising signs continue to bolster hopes that we’ve made it to the other side of this pandemic. Even though the U.S. recorded its highest daily death toll of 1,800, hopeful signs are emerging from devastated areas, like New York.
On Tuesday, New York Governor Andrew Cuomo said that hospitalizations are “reaching a plateau,” and growth is “starting to flatten.”
Change in daily ICU admissions is way down, and that’s good news. The daily intubations number is down, and that’s good news. The discharge rate is right about where it was.
The forecasting model of the White House lowered its projections of total U.S. deaths to 60,400 by August. This total is a far cry from the up to 240,000 deaths the Trump administration hinted at last week. For good measure, it’s also a far cry from a “hoax.”
Early adopters of ‘stay-at-home’ orders, like California and Washington, are showing promising signs as well. According to the Washington Post, one doctor in San Francisco said, “the ER is eerily quiet right now.”
Other Countries Are Showing Promise
Meanwhile, countries like New Zealand have managed to flatten the curve of infection with great success. The country of 4.7 million quickly enforced strict lockdowns, and it appears as though they may have already passed their peak.
Ground zero for the COVID-19 outbreak is seemingly recovering nicely, as well. Wuhan lifted its lockdown today. While many people question China’s credibility in reporting cases, Wuhan reported no new cases on Tuesday.
The Stock Market May Be Doing Well, but Is It an Illusion?
While the stock market continues to rise on the wings of hope, we can’t lose sight of reality. People are still filing for unemployment in record numbers as companies lose massive amounts of business.
Reality should start to set in once we start seeing earning reports for Q1. Analysts at JP Morgan think this is ‘likely a bear rally.’ They add:
There is reason to be cautious as this looked to be a relief rally ahead of next week’s start of Q1 earning season and before data reveals the depth of the virus impact.
One analyst predicts we’re heading for a three-year bear market where the S&P 500 loses a whopping 89% of its value.
On top of these bleak predictions, we still don’t know how the coronavirus pandemic will shape out. It’s possible we’re just weathering the first of many storms. Major cities, like Tokyo, could be just starting their battle.
The National Academy of Sciences warns that the coronavirus may not fade with warm weather, as many are hoping.
However this turns out, the last thing we should is let up on social distancing. Whatever the stock market does, don’t let it pull you out of self-isolation. Your money, and your life, may depend on it.