Wall street has registered a violent rebound (Dow Jones: + 11.37%; S&P 500: + 9.38%; Nasdaq: + 8.12%) after slump more than 30% from highs. The Dow Jones It has dropped 37% since its last record, but this Tuesday it has rebounded a eleven%, in his best session since 1933, in times of Great Depression; and the S&P 500 it has advanced 9% after sinking 34% in just one month; while the Nasdaq it is up 8% after falling 30% from highs.
Its about fastest and most vertical bear market in history, in response to one of the greatest health crises in the developed countries. The Covid-19 pandemic It has paralyzed the global economy and caused a crash in world stock markets in just one month and also very strong rebounds like the current one, in another session that will go down in history. Values like Chevron, American Express and Boeing more than 20% have shot up, in a day of generalized gains.
The rebound on Tuesday has been led by the hope that the American Congress finally approves an economic stimulus plan valued at 2 trillion dollars (10% of GDP), which includes direct payment to each American of checks of $ 1,000, which will mean an outlay of about $ 500 billion.
Senators are negotiating the latest trouble spots on a bill that analysts consider essential to counter the enormous impact of Covid-19 on the American economy and which defends the Trump administrationwhich on the other hand is being highly criticized for the management carried out in this crisis. The president has repeated again that it is worse to keep the country paralyzed and hopes to lift mobility restrictions in mid-April.
On an economic level, the PMI services March preliminary in the US has plummeted to 39.1 from 49.4, below the consensus forecast of 42.0. The market already discount a recession, although the big question is what caliber will it be (the IMF anticipated yesterday that "as bad or worse" that caused by the 2008 financial crisis, when the S&P 500 plunged 56%).
In this sense, confirmed coronavirus cases in the USA now exceed 46,000, with 593 deaths, which places the country as the third most affected in number of cases, only behind China and Italy and ahead of Spain. The state hardest hit by the pandemic remains New York, with 20,875 positives, of which 13,119 belong to New York City.
At the monetary level, the market continues to assimilate the massive wave of stimuli launched by the Fed to prevent the health and economic crisis from becoming a financial crisis. This is the largest monetary injection in history, which however has not managed to stop the collapse of the stock markets, because investors still not enough to assess what the final impact of the pandemic may be, especially when it can be contained. The Fed will buy unlimited assets for as long as necessary.
"It has become clear that our economy will face serious disruption", so that "aggressive efforts must be made in the public and private sectors to limit job and income losses and promote rapid recovery once shocks subside, "the entity said Monday.
In other markets, oil West texas up 2% to $ 23.88, the euro It appreciated 0.4% and changed to $ 1.0748 and the profitability of 10-year American bond It rebounds 7 basis points, up to 0.84%.
EL-ERIAN SEES "FOCUSES OF VALUE"
Mohamed El-Erian, principal economic advisor to Allianz, considers that the collapse of the world stock markets supposes "opportunity" investment, but only for investors with high risk tolerance. El-Erian, who correctly anticipated the market crash in early March, is a renowned expert in the United States.
"For those people who have remained defensive and have a great appetite for volatilityare beginning to appear true pockets of value, and they should be analyzing them. He hasand areas of long-term value, even now, before we turn around. But you have to have one tremendous ability to withstand volatility"he commented.
By technical analysis, the Dow Jones has starred in "a 50% correction of all the rise in the index from the lows of the last great crisis, the lows of 2009. So this crisis has just been ahead half of the index earnings of the last eleven years"says José María Rodríguez.
"Let's see if the area of the 18,000 points manages to brake the falls because otherwise the next support would correspond to the adjustment / reverse of the 61.8%: the area of the 15,000-15,300 points"affirms this expert. The selective closed at 20,700 points after rebounding 2,112 points in a single day.
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