Stocks are making a run higher once again on Tuesday, building on the robust momentum breakout from the recent range in the previous session, as investors are becoming more sanguine about a decline in fresh coronavirus cases.
The Dow Jones Industrial Average climbed over 600 points higher, or 2.98%. The S&P 500 rallied 2.6% while the Nasdaq Composite added 2.1%, although the major indices have fallen considerably from their highs near the open, when earlier in the day, the Dow was up more than 800 points.
Stock index ETFs were been elated by the news Monday, and are moving in sync with stock indices Tuesday, with the SPDR S&P 500 ETF Trust (SPY) up 2.82%, the SPDR Dow Jones Industrial Average ETF (DIA) climbing 3.07%, and the Invesco QQQ Trust (QQQ) up 1.96%.
“Investors chose to accentuate the positives, as they have been mostly doing since the bear-market low,” said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note to clients. “In our opinion, we are in the midst of a Great Rebalancing away from bonds and into stocks.”
“The bear market has most likely discounted a depression-like recession packed into Q2 and Q3,” he said. “It certainly hasn’t discounted the possibility of an actual apocalyptic depression lasting through at least 2021 and beyond. On the contrary, the market’s recent action suggests that investors are betting on an economic recovery starting during Q4 and continuing through 2021.”
Still, the coronavirus and subsequent economic damage is far from over, as quarantines are still in place in many states, and the cases in the U.S., the world’s most affected country, climbed to 368,000 with at least 10,000 deaths, according to data from Johns Hopkins University.
“We still believe that the odds are quite high that the lows from March will be retested and probably undercut before this bear market comes to an end,” Matt Maley, chief market strategist at Miller Tabak, said in a note on Monday.
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