The S&P 500 (^ GSPC), one of the most important indexes in the United States and considered the most indicative of the real situation of the stock market, turned positive this week in the calculation of what is going on this year after the harsh punishment that I had received out of fear of the impact of the coronavirus on the economy. The rise has been meteoric, 40% from the lows of March.
<p class = “canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm” type = “text” content = “As the coronavirus spread throughout the world , stock markets were plummeting at historical rates. However, after only three months, peaks are already being recorded on Wall Street. US stocks have risen to such an extent that the Nasdaq index (^ IXIC), which compiles the values of the most important companies in the technology industry sector, has just marked its highest level in history, after six days of earnings. “data-reactid =” 13 “> As the coronavirus spread Around the world, stocks were plummeting at historical rates. However, after only three months, peaks are already being recorded on Wall Street. US stocks have risen to such an extent that the Nasdaq Index (^ IXIC), which collects the values of the most important companies in the technology industry sector, has just marked its highest level in history, after six days of earnings.
Some brutal falls and rises for Wall Street in such a short period of time
One of the conclusions that we can draw from all this is that the New York Stock Exchange, the most followed and most traded in the world, the great reference, accustomed to moderate movements, seems to have become a ‘casino’. For sample serves the interesting graph that they have made in Chartr.
In it, you can see the last 10 bear markets (you enter one when the S&P 500 index falls more than 20% from its previous maximum) compared to that of 2020. In the center is the number 0, that is, the moment when the bag bottomed; On the left you can see the downward trend and on the right the upward or recovery trend.
This chart reveals two things about the 2020 bear market: it was simultaneously the biggest decline and the biggest rally of any of the last 10 bear markets. The data also tells us that after hitting its lowest point, the stock market has generally risen about 15% so far, but the 2020 bear market is already 44% above its lowest point.
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What’s going on?
Financial analysts attribute these increases to relief in restrictions from confinement and reopening of many businesses, which is allowing thousands of American citizens to return to their jobs.
Some will wonder if these strong rises will continue to “infinity and beyond” and if, therefore, it is necessary to invest in the stock market. Be very careful, because in this environment of so much uncertainty there may be scares.
There are still many doubts to resolve and although investors have been very optimistic in recent weeks they have also expressed their doubts. The best example was seen this Thursday, June 10, when fear of a second wave of contagion in the US pushed Wall Street indexes back 7%.
We cannot forget that the United States has been in recession since February, with characteristics and dynamics different from the usual ones due to the pandemic, which is why the full recovery will not be so fast.
The Federal Reserve and the OECD anticipate a long and complicated recovery
Some analysts explain that the rally of these previous weeks was supported by stimuli and by an overt over-reaction to the fact that the economies were demonstrably reopening, leaving behind the worst historical data on activity as a result of a ‘lockdown’ as we had not Never seen. And we all knew it, those of us who watch from the outside and those who take part in this live taking positions — which was the only thing that was done in these days, taking positions.
Both the Federal Reserve and the OECD have described the current economic outlook very grimly. Fed President Jay Powell has stated that one should not be fooled by the good numbers that the North American indices are registering in recent days, since the prospects for the economy show a very complicated scenario. The GDP of the United States will drop by 6.5% this year and the unemployment rate is expected to reach 9.3% at the end of 2020, a figure lower than the 13.3% in May, but well above pre-pandemic levels (the country closed 2019 with an unemployment rate of 3.5%).
he OECD, for its part, foresees a 14.4% drop in GDP for Spain, raising the debt to 129.5% this year. In the event of an outbreak in the autumn, the organization warns that Spain will be the hardest hit of all the developed economies, which is explained by its great dependence on tourism and services, which are severely affected by the closure of borders and social distancing measures. Thus, it also calculates that the unemployment came to be around the 20.1%, a figure much higher than the 14.7% with which it closed the previous year and which is approaching levels similar to those of 2011.
It will not be so easy to recover from the inactivity of the last two months, especially considering that we live in a globalized and interconnected society, where some countries depend on others, and where not all have been punished by the pandemic for neither do they have the same capacity for economic recovery. Be careful with the bosa, therefore, it is only for seasoned players with a lot of leash.
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