Stock Markets Are Cheering the Stimulus Package but is it the End of the Pandemic?
Stock markets have now posted big gains over three straight sessions. Investors are hopeful that the hardest-hit companies will be able to sustain operations after the Trump administration announced over $500 billion in easy to access loans for struggling corporations.
The White House recently announced a $2 trillion stimulus package to help small businesses and the American people avoid a looming recession.
“The market is running with the assumption that while this tumult will be the deepest recession in modern-day financial history, it will also be the shortest,”
Stephen Innes, chief global markets strategist at AxiCorp.
Investors look to be buying the dip as many believe the market may have already bottomed last week and could now be stabilising thanks to the announcement of the massive stimulus package.
This is all occurring against the background of the coronavirus outbreak, which has wiped off more than 35% of the value of global stock markets in just a month, but continues to spread.
After China and Italy, New York is turning out to be the new epicenter of COVID-19. More than a third of the global population is now under stay-at-home orders and corporations are still largely unaware of when they will be able to resume normal operations.
At present, coronavirus cases have topped 526,000, including 82,400 in the United States. The domestic death toll in the US has surpassed 1,100. Of arguably more concern, is that case numbers still appear to be rising exponentially, despite strict government restrictions.
Many market analysts believe that while Trump’s stimulus package will provide temporary relief to companies, the market has yet to experience the worst due to impacts to the demand side, which will take far longer to stabilize.
Airlines, tourism, and automakers are among the industries that will experience slowest demand growth, even as coronavirus impacts are likely to fade in the coming months.