Wall street has closed at session highs (Dow Jones: + 1.62%; S&P 500: + 1.15%; Nasdaq: + 0.91%) led by the rebound of banks and oil companies and after the negative closing of the previous three sessions. Investors have discounted other unemployment data worse than expected, as the coronavirus has devastated others 2.98 million jobs in the last week, above the 2.5 million anticipated by the consensus. However, the banking sector, grouped in the KBW Banks Index, has rebounded 3.9% and has been the engine of the New York Stock Exchange. Furthermore, the oil companies and the energy sector have advanced due to the rise in oil.
And that the stock market is more questioned than ever after the rally since the lows of March. Two of the most popular American investors, David Tepper and Stanley DruckenmillerThey have stated that equities are highly overvalued at the moment. Druckenmiller has commented that "it presents the worst risk-reward equation I've ever seen in my career. "
For the investor millionaire David Tepper, Wall Street has reached a level of overvaluation only comparable to that registered in 1999, before the outbreak of the bubble of the 'dot.com'. According to the founder of Appaloosa Management, there has been a "bad capital allocation"in certain" niches "of the American stock market after the stimuli of the Fed.
On weekly unemployment data, analysts from Berenberg claim that the impact of the virus has destroyed 36.5 million jobs in the last two months. And they add that the unemployment rate will continue to rise significantly in May, after shooting up to 14.7% in April from 4.4% in March.
"The slow decline in initial stoppage requests supports our expectation of a slow recovery of the labor market, which depends on the evolution of the pandemic. We expect the unemployment rate to be more than double its pre-crisis level in late 2021. A slow recovery in the labor market will limit the rebound in consumption, especially of non-essential goods and services, "they say.
To this has been added the very cautious vision of the economic recovery that Jerome Powell anticipated this Wednesday. The Fed President stressed that we are facing the "biggest recession since World War IIFor this reason, he asked for more fiscal incentives to mitigate the impact of the pandemic.
"Additional fiscal support could be expensive, but it's worth it if it helps prevent long-term economic damage and leads to a stronger recovery.. It is a commitment for our politicians, who exercise tax and spending powers, "he said in a conference call at the Peterson Institute for International Economics.
In the raw materials market, the West Texas oil up 8% to $ 27.43, benefiting the American oil sector, very punished in recent months for the collapse of black gold. Besides, the ounce of gold up 1.3% to $ 1,740, while the euro it depreciates 0.2% and changes to $ 1.0797. Finally, the profitability of 10-year American bond falls to 0.62% and the VIX volatility index down 8%, up to 32 points.
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