Mar 25, 2020 - Economy & Business

Investors remain wary despite Dow's historic single-day gain

Photo: Spencer Platt/Getty Images

The Dow rose more than 11% to clock its largest single-day gain since 1933 on Tuesday, but few are confident the market is set for a sustained rebound. Experts are urging tempered enthusiasm with U.S. and global equities on pace for a rare second day of gains.

What they're saying: "You’re going to see movement in the market, extremes in both directions, that have nothing to do with any of the headlines necessarily, but just the nature of the beast at this stage in the bear market," Liz Ann Sonders, chief investment strategist at Charles Schwab, tells Axios.

Be smart: Neither U.S. nor global equity prices have posted back-to-back daily gains since the first half of February and more than $20 trillion has been erased from equity markets since late January.

Watch this space: The dollar declined for the second day in a row, suggesting the panic-driven global liquidity squeeze that pushed the greenback to near its highest level in 12 years earlier this week has subsided.

  • Demand for the dollar is a good barometer of "whether the Fed’s actions are having the intended affect to address severe disruptions" in credit markets, Michael Arone, chief investment strategist at State Street Global Advisors, tells Axios.
  • "Early signs are positive but we’ll need to see more movement to feel as though things are persistently improving."

The big picture: Many investors are still hiding out in cash, unconvinced the worst is over.

  • While historic bond buying by the Fed and other central banks and expectations of a $2 trillion U.S. stimulus package were positive developments, market participants say the "third prong" of a recovery — a peak in global coronavirus diagnoses — remains elusive.
  • “We still need to see a slowing of the virus cases and a peaking in the U.S., because until then we’ll have these huge relief-rally days and then we’ll get a scary day and the market will plunge down again,” Carol Pepper, CEO of Pepper International, told Bloomberg TV.

Go deeper: The market is not quite as bad as the Dow makes it look

Go deeper

The market will need the Fed again in 2020

Illustration: Aïda Amer/Axios

The No.1 risk to the stock market continuing its outperformance next year is not President Trump or consistently weak U.S. economic data or even China, senior analysts at John Hancock Investment Management say, but whether or not the Fed continues to stimulate the economy through what they call "not QE."

What it means: Fed chair Jerome Powell has insisted the central bank's bond buying program — initiated after rates in the systemically important repo market spiked to five times their normal level in September — is not quantitative easing.

Stocks plunge 7% at close of Wall Street's brutal day

Photo by Spencer Platt/Getty Images

U.S. stocks closed more than 7% lower on Monday, after a wild day for the stock market that saw a rare halt in trading.

Why it matters: The sell-off reflects serious fears that the oil price drop and the coronavirus could throw the economy into a recession.

Go deeperArrowUpdated Mar 9, 2020 - Economy & Business

Stocks plunge 9% in coronavirus sell-off

Photo: Bryan R. Smith/AFP via Getty Images

Stocks plunged more than 9% on Thursday, with the S&P 500 26% below its February all-time high.

Why it matters: The potential economic impact from the coronavirus ended Wall Street's longest bull run in history while roiling stock markets around the globe.