In short: US stock exchanges rose in early trading on Tuesday, 7 April 2020, as optimism grew that the spread of Covid-19 was slowing in several outbreak centres. The Dow gained 1.96 percent, the S&P 500 gained 2.51 percent, and the Nasdaq gained 0.85 percent, but analysts warned the rally might not last.
United States stock exchanges rose in early trading today, Tuesday (04/07/2020).
Based on Bloomberg data, the Dow Jones Industrial Average rose 1.96 percent or 444.60 points to as low as 23,124.59 at 09.24 WIB. Meanwhile, the S&P 500 index gained 2.51 percent or 66.75 points to 2,730.43, while the Nasdaq Composite index gained 0.85 percent or 67.59 points to 7,980.82.
The S&P 500 index even rose to 3.5 percent amid optimism about slowing the spread of the corona virus in a number of countries that are at the center of the spread.
If the rally holds, the index will meet the definition of a bullish market. The Stoxx Europe 600 index also strengthened after new infection rates slowed in France and Italy.
Risk assets including corporate stocks and bonds rebounded amid a pandemic, after a number of countries poured stimulus to stem the impact of the corona virus on the economy.
However, despite the new stimulus coming from a surge in the number of new infections in most of Europe and in New York, data showed sentiment among US small businesses weakened in March.
Because the economic impact of the measures taken to control the outbreak continues to be felt, many market participants warn that the strengthening is unlikely to take place sustainably.
“Optimism in the direction of the equity market will be difficult to maintain until we see more clarity about the outlook for corporate earnings,” said Marija Veitmane, an analyst at State Street Global Markets, as quoted by Bloomberg.
The Numbers in Detail
Based on Bloomberg data quoted in the article, the Dow Jones Industrial Average rose 1.96 percent, or 444.60 points, to 23,124.59 at 09.24 WIB. The S&P 500 index gained 2.51 percent, or 66.75 points, to 2,730.43, and even rose as much as 3.5 percent during the session. The Nasdaq Composite gained 0.85 percent, or 67.59 points, to 7,980.82.
Why Markets Rose
The rally was driven by optimism that the spread of the corona virus was slowing in a number of countries at the centre of the outbreak. New infection rates slowed in France and Italy, lifting the Stoxx Europe 600 index as well. Risk assets, including corporate stocks and bonds, rebounded as a number of countries poured stimulus into their economies to stem the impact of the virus.
Why the Rally Might Not Last
Despite the stimulus, data showed sentiment among US small businesses weakened in March, and the economic impact of the measures taken to control the outbreak continued to be felt. Many market participants warned the strengthening was unlikely to be sustainable. As Marija Veitmane, an analyst at State Street Global Markets, told Bloomberg: optimism in the direction of the equity market will be difficult to maintain until there is more clarity about the outlook for corporate earnings.
Frequently Asked Questions
What does it mean for an index to enter a bull market? The article notes that if the rally held, the index would meet the definition of a bullish market. In general usage, a bull market is commonly defined as a rise of 20 percent from recent lows.
Did the rally hold? This article was written in the middle of the trading session, so it does not answer that question. Its own warning stands: the gains depended on whether optimism about slowing infections and corporate earnings held up in the days that followed.
