Dow, S&P 500, Nasdaq 100 Price Analysis
Directional Dilemma in US Stocks
It’s been a pretty astounding turnaround from the late-March lows across US equities. While all of the Dow[1], S&P 500[2] and Nasdaq[3] 100 lost about a third of their value in a six-week-stretch, the bullish push since has been pretty remarkable, as well. The Nasdaq 100 gained as much as 41% from those March lows, while the Dow put in a gain of as much as 36.8% and the S&P 500 as much as 36.4%. All large numbers, by any stretch of the imagination; but now that stocks have shown some semblance of recovery, the big question is what’s next?
On the bearish side of the argument – there’s still a considerable number of unknowns out there. As some areas begin re-opening, will another wave of infections cause yet another shutdown? And even if they don’t, how will consumers respond? It seems unlikely that matters will just go back to what they were only three months ago – with restaurants full and public transportation packed. Social distancing guidelines remain in a number of areas so, its logical to imagine some continued economic pressure for a number of business lines.
What happens to commercial real estate? Or US-based oil[4] firms that may now be operating below break-even levels? A number of risk factors remain and the longer that the US stays shut down, the louder those factors can become.
On the bullish side of the coin: The US Government. They’ve already done multiple rounds of stimulus/aid and it’s unlikely that this will stop anytime soon. What was once unthinkable (QE) has now not only become commonplace but a regularly-employed vehicle in the
