Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School of Business, expressing some optimism Monday about the outlook for a stock market that may be starting to reassert a bullish stance after a punishing month.
During a phone interview on CNBC, the professor said he thinks the stock market may have put in its bottom last week.
Siegel says there are four things he will be watching to determine the staying power of this current run-up in stocks, which have seen the Nasdaq gain 15.1% from a March 23 low, the Dow gain 20.13% and the S&P 500 rise 17.6%:
- Fiscal and monetary stimulus (achieved, he says)
- Flattening the curve (progress is being made)
- Vaccines and therapeutics
- Deadlines for economic normalcy
Markets on Monday appeared to draw some optimism from President Trump’s decision to extend social-distancing guidelines to April 30 from April 12.
Stocks continue their rebound from coronavirus plunge, Dow jumps 3%
Stocks rose on Monday, building on a strong rally from last week as the U.S. extended measures to contain the coronavirus outbreak.
The Dow is now up 20% from its coronavirus sell-off low reached on Monday while the S&P 500 has risen more than 17% from those levels. The Nasdaq has bounced more than 13%.
President Donald Trump said at a news conference Sunday the national social distancing guidelines have been extended to April 30, adding the death rate from the virus would peak in two weeks.
These measures, while they may cause a sharp economic disruption in the near term, are seen by some investors as preventing long-term damage to the economy.
Skeptical Chinese Manufacturing Numbers
China on Tuesday said the official Purchasing Manager’s Index for March was 52.0, beating expectations for an economy hit by the coronavirus outbreak.
Analysts had expected the official PMI to come in at 45 for the month of March.
However, there are reports leaking out of China that officials are covering up the real impact of the pandemic in China.
One way deals particularly with manufacturing. Leaked reports are that empty factories are still keeping all the lights, air conditioning and all other electricity running. Why? As satellite overfly China it will look as if things are back in full production.
China’s National Bureau of Statistics said in of the PMI reading that there was continued improvement in the prevention and control of the outbreak in March, with a significant acceleration in the resumption of production.
The bureau attributed the expansionary PMI reading to the low base in February, but cautioned that it does not mean that the country’s economic activities have returned to normal levels.
Very skeptical but read on in the link and make your own decision.