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WHO’s Virus Announcement Adds Voltage to Stunning Stock Market Rally

Last Updated September 23, 2020 1:59 PM
Joseph Young
Last Updated September 23, 2020 1:59 PM
  • The World Health Organization (WHO) says the risk of asymptomatic individuals spreading the virus to others is low.
  • The U.S. stock market is in the middle of a historic recovery, and the positive data from the WHO may further fuel the confidence of investors.
  • Billionaires are now showing signs of defeat, as Stanley Druckenmiller says the stock market humbled him.

The World Health Organization (WHO) has confirmed that the asymptomatic spread of the COVID-19 virus  is ‘very rare’. Major progress in understanding the pandemic may fuel growing appetite and certainty for investors in the stock market.

Maria Van Kerkhove, WHO’s emerging diseases and zoonosis unit head, said:

It still appears to be rare that an asymptomatic person actually transmits onward to a secondary individual.

The thread of asymptomatic distribution  of the virus sparked fear across the U.S. and Europe as economies started to reopen.

Top scientists now believe individuals without symptoms infecting other individuals is uncommon. The findings are likely to boost the confidence of investors in the near-term.

Source: Rand Paul 

Institutions Aren’t Buying as Stock Market Rallies, But Not Selling Either

After the massive plunge of equities on March 23, institutional investors started to prioritize cash over stocks as a safety net.

But, that does not mean institutions have been selling stocks.

According to a Gallup poll, investors have not been in a rush to sell . Around 55% of the respondents invested in the stock market said they are holding steady with no intent to sell.

The U.S. stock market has had a historic run in the past two months due to the explosive demand from retail investors.

Retail investors were only able to push the stock market upwards because the selling pressure from institutions was low.

The stock market is on a meteoric run. | Source: REUTERS/Lucas Jackson 

Now, billionaires are also beginning to show signs that they believe in the stock market rally.

Stanley Druckenmiller, whose net worth surpasses $4.7 billion, said the stock market trend humbled him. 

During the Economic Club of New York’s webinar, Druckenmiller said his fund generated a 3% return since March.

The Dow Jones Industrial Average (DJIA), in contrast, saw a 48.3% upsurge since March 23.

stock market
The Dow Jones Industrial Average sees a 48.3% rally since late March | Source: Yahoo Finance

Billionaires and large hedge funds rushed to safer alternatives like bonds and cash to protect their holdings.

The cautious approach of high net-worth investors in the midst of multi-trillion dollar stimulus,  positive data about the pandemic, and relaxed financial condition proved to be ineffective.

Economies Will Reopen More Aggressively With Optimistic WHO Data

In the near-term, the data from the WHO may act as a hopeful variable that may further add to the momentum of the stock market.

If asymptomatic cases decline and individuals without symptoms are unlikely to spread the virus, then it will encourage governments worldwide to take a stronger stance in reopening their economies.

The plans of the U.S. government to fully reopen its economy  and recover the jobs market were the main catalyst of the recent stock market uptrend.

The WHO said it is possible to “drastically reduce” transmission of the virus by isolating asymptomatic cases. If so, the risk of an enormous second wave of the virus decreases.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the stocks mentioned.