Stocks rallied this week as
Even after a loss on Friday, the S&P 500 had its best weekly percentage gain since
“The takeaway from this week is the initial down phase has probably run its course,” said
The S&P 500 remains 25% below the record highs it set in February, however, after nearly relentless selling earlier this month. Strategists like Delwiche know the outlook is still uncertain, at least until more progress can be made fighting the pandemic and the number of new cases level off and start dropping. This week the
A lot will depend on how badly the coronavirus outbreak stalled the
“The key at this point is getting a handle on the spread of the virus so that then we can start to think about what (economic) growth looks like for the remainder of the year,” Delwiche said. Some economists are predicting the
On Friday, the S&P 500 fell 3.4%, erasing some of the rally from the previous three days. The index still finished with a gain of 10.3% for the week. The Dow closed with a weekly gain of 12.8%, led by a rebound in shares of
The
Besides the chance to buy companies seen as oversold, the overall downturn in the markets in recent weeks is creating good opportunities for investors to buy into sectors of the market that will be “prevalent” for the next decade, said
That said, Marcelli cautioned that the next few weeks will be challenging for investors, who should refrain from any drastic action.
“Investors have to keep bracing for volatility,” she said. “This is not a time to make a complete portfolio makeover.”
Much of this week's rally was driven by enthusiasm over a historic
The push to deliver financial relief took on more urgency as the outbreak widened. The number of cases in the
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, or death.
Investors have yet to get a clear picture of exactly how badly the crisis has hurt corporate profits, the ultimate driver of stock prices. Many companies have simply withdrawn the profit forecasts they issued earlier in the year.
At the start of this year, analysts expected S&P 500 companies' earnings would grow 4.4% in the January-March quarter. They now expect earnings will be down 4.1%, according to FactSet. That may not fully reflect the size of the potential earnings declines this year, with only 15% of analysts having adjusted their estimates within the past couple of weeks, according to a report by Credit Suisse.
Earnings for airlines, which have been hit by lost bookings as businesses and individuals canceled travel plans to minimize their risk of contracting the virus, are expected to be terrible. Wall Street’s estimate for Delta went from an expected 2.2% decline to a 108% plunge.
Energy markets are also feeling the impact of the virus outbreak. The price of crude oil slid 4.8% to close at
That's sure to cause even more trouble for energy companies, which are lagging far behind the rest of the market. The price of oil has plunged recently, in part due to a price war that broke out early this month between
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