Wall street has prolonged its historic rally (Dow Jones: + 1.91%; S&P 500: + 1.69%; Nasdaq: + 1.58%) despite the terrible data on unemployment in the United States. The unemployment rate has soared from 4.4% in March to 14.7% in April, the largest rise in its history and the highest since the Great Depression of 1929, when it reached 24.9%. In total, the virus has destroyed 20.5 million jobs in a single month. During the week, the Dow is up 2.5%, the S&P 500 3.5% and the Nasdaq 6%.
Ranko Berich, Head of Analysis at Monex Europe, comments that "today's employment figures are catastrophic on a human and economic level, but from a political or market perspective, they simply confirm what central banks and market participants have been discounting since March: a global recession of unprecedented abruptness and depth"
James McCann, an economist at Aberdeen Standard Investments, recalls that this is the highest unemployment rate since 1930 and highlights that, in that period, a series of errors generated total misery and enormous economic damage.
"The challenge today is for the Federal Reserve and Congress to get ahead of this crisis as it unfolds. After a strong initial response, there is a great risk that they will be left behind and the abrupt stop of the economy will turn into a prolonged fall that would be ruinous. Avoiding this scenario will require the Fed to adopt new tools like helicopter money, "he says.
In political matters, the new commercial approach between the representatives of China and the USA. The two largest economies are bringing positions closer together again, and the market breathes relief after political tensions between Washington and Beijing over the origin of the coronavirus.
On the business front, the stocks that have risen the most in the Dow Jones have been chemistry Dow, Caterpillar and Exxon Mobil, with increases of more than 4%.
At a strategic level, "if history is a guide, Wall Street will return to March lows"It is what analysts think of Bank of America Global Research in its latest report on the evolution of US equities. The valuations are close to the "highs of the technology bubble"So they have discounted "a record short recession or that the Fed will buy shares."
The S&P 500 peaked in April in 2,940 points and it has closed at 2,929 integer levels. "It would not be unlikely that the S&P will recover until close to 3,000 points before turning around and returning to lows, "say these analysts.
According to your assessment, the size of the economic shock, along with its coincidence with the current recession, anticipates that American stocks will fall again strongly, despite the strength that the technological index is showing Nasdaq. If the recent S&P high of April 29 is not exceeded, the subsequent correction "will be manual"they add.
In the raw materials market, the West Texas oil It is up 1.5%, to $ 23.91, and is up nearly 20% for the week. Besides, the ounce of gold falls 0.6% to $ 1,715, while the euro 0.1% appreciates and changes to $ 1.0843. Finally, the profitability of 10-year American bond rises to 0.66% and the VIX volatility index continues to fall (-8%, up to 29 points) and away from the record highs in March above 85 points.
By technical analysis, the Nasdaq "it continues to offer a flawless appearance" as it has managed to rise above the 200-session average. "The technological selective has bounced 35% since the annual lows in March, which has allowed overcome the 61.8% Fibonacci retracement of the bearish momentum that began at the end of February, "explains César Nuez, an analyst at Bolsamanía.
"This is a sign of strength that makes us think of a return to the historical highs drawn at the beginning of the year at 9,736 points. To do this, however, you should confirm overcoming the key resistance of 9,000 points, prices that could calmly attack in the coming days, "concludes Nuez. The selective has closed at 9,121 integers.
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