Moderate sales in Wall street behind the strong rebound of the last daysHowever, it is not enough to prevent the Dow Jones from going to close the worst first quarter in its history. Despite bouncing a fifteen% in the last five sessions the Dow Jones accumulates a fall greater than 20% from its all-time high in mid-February.
In addition, during the month of March it accumulates a 12% drop, its worst month since October 2008. During the quarter, it accumulates a collapse of 21.8%, its most bearish quarter since 1987 and the worst first quarter in its history.
The market has found moderate stability pending another round of economic stimulus in the US. In this context, Donald Trump wants to promote an infrastructure plan valued at $ 2 trillion to boost economic activity in the coming years.
It’s not all good news and Goldman Sachs has downgraded its growth prospects for the second quarter in the US. Now, the investment bank foresees a unemployment of up to 15% and a contraction of -34% in this period. The entity does not see a vigorous rebound in the economy until the third quarter as the coronavirus continues to spread throughout the country, which has already registered more than 175,000 positive cases and more than 3,400 deaths.
The Fed itself anticipates that, in the worst case, unemployment in the US soars to 32% and the millions of unemployed triple the figure recorded at the peak of the Great Recession. In total, a total of 47 million jobs due to the economic slowdown due to the outbreak. This projection is even worse than that of James Bullard, chairman of the St. Louis Fed, who last week anticipated a strike of up to 30%.
JPMORGAN DOES NOT TRUST THE REBOUND
Analysts JPMorgan They do not trust the rebound that the world stock markets have starred since the annual lows marked a few sessions ago. “Given the speed of the crash, a relief rally has occurred, but it’s likely to end up fading“argue these experts, who consider the current rebound as”tactical“
For the recovery to continue, the negative spiral between the weakening labor market, depressed end demand and falling earnings should not take root. Although “it is unlikely that we will see much clarity about it before the summer,” they admit.
Finally, they explain that in the last two recessions, business profits fell by 40% and 20%, respectively, compared to 3% today. Therefore, they consider that the stock markets have not yet discounted all the bad news that is yet to come.
In other markets, the West Texas oil it rebounds 5% to $ 21.07, after hitting a low of the last 18 years. Black gold celebrates the impending summit between Trump and Putin to try to stabilize energy prices.
Furthermore, the euro depreciates 0.7% and changes to $ 1.0962 and the profitability of 10-year American bond it goes up to 0.69%. For his part, the VIX volatility index falls 1%, up to 56 points.
And by technical analysis, the Dow Jones, has rebounded from the support area that is the 50% of set / reverse level of all the accumulated rise from the lows of the last great crisis: March 2009. “As the most important resistance zone we have the last of the big bearish holes, at 23,185 points“indicates José María Rodríguez, analyst at Bolsamanía.