The Dow surges 500 points and stocks turn positive for 2020
Since then, however, the stock market has rocketed back 44%, turning positive for the year for the first time since June 8 and only the second time since February.
The stock rocket took off in the early spring as investors bet — correctly — that the Federal Reserve and US Congress would pump the economy full of stimulus. That came in the form of business loans, asset purchases, stimulus checks and other programs that helped keep the economy from collapse.
However, as the US economy reopens, Covid-19 cases continue to set new records after dissipating for a couple months. That has forced some states and municipalities to rethink their reopening plans.
But investors know the second quarter is a wash, and some investors are hopeful that the reopening of some parts of the economy in May and June gave earnings a late-spring boost — not enough to turn them positive, but perhaps not quite as negative as predicted.
Absent a few hiccups along the way, bullish sentiment has certainly returned to Wall Street. Investors are ignoring the dire warnings from governors and mayors that the coronavirus pandemic continues to threaten the economy. If anything, in this “bad news is good news” environment, a worsening economic climate might convince Congress and the Fed to pump companies and consumers with even more stimulus dollars.
Meanwhile, the S&P 500 is only 4.7% away from setting a new record. If this bull run continues, that could happen awfully soon.