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Stocks continue rally, await reopening of U.S. economy

April 17, 2020

As of April 17, 2020

Each day brings more news – some of it encouraging, some of it not – about our efforts to curtail the spread of COVID-19 and reopen the U.S. economy. Lawmakers at the federal, state and local levels are trying to find the appropriate time to reopen the economy, as well as ways to support people whose lives and livelihoods have been affected by the coronavirus pandemic.

As we look ahead, we appreciate the comments of Raymond James Chief Investment Officer Larry Adam. He shares that while it may seem odd, the S&P 500 index just experienced its strongest 16-day period since 1938. He adds that from the market lows that brought an end to the bull market in late March, the main forces that are driving the rally are: unprecedented monetary and fiscal support from policymakers, plus signs the health crisis is improving, and discussions of re-opening the economy are forthcoming. “Further actions from the U.S. Federal Reserve and Congress are likely to continue to support the economy,” Adam said. “However, we believe the next up-leg in the equity rally will require more favorable news on the potential for a therapeutic, antibody or vaccine.”

You can view a short video of Larry’s comments here.

Definitions:

S&P 500: Representing approximately 80% of the investable U.S. equity market, the S&P 500 measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested.

Buy Low: This is a colloquial term used for a limit order that is executed when an index reaches a certain level from its peak, in this case, when the S&P 500 dropped below 2,200. This term does not imply that this will be the lowest price for the equity markets. This is viewed as a buying opportunity based on decreased valuations from the market peak.

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