All major U.S. stock indexes have risen more than 20% from their March lows. Despite weakness on Monday and Tuesday this week, investors remain confident that the worst of the coronavirus epidemic is behind and that unprecedented intervention by the Federal Reserve will keep asset prices high.
But Tony Dwyer, equity strategist at Canaccord Genuity, cautions investors that they may want to wait for prices to fall significantly lower before buying in to the market amid an ongoing fight against COVID-19.
“Just like the market discounted too much bad news on the crash, it likely has discounted too much good news on the relief rally,” he wrote in a Monday note to clients, “We do not want to fight a Fed that is already buying high-yield corporate and municipal debt, but ultimately, we need to see a better indication the economy is nearing the end of the recession in order to add exposure after such a significant relief rally.”
These Two Tech Stocks Are ‘OK’ Despite a Scary Earnings Season
A moment of truth is coming for the world’s biggest technology companies. They are now starting to report first-quarter results post coronavirus shutdowns which slammed the markets.
Tech analyst Gene Munster expects a couple of widely held names to weather the storm and emerge as big winners: Apple and Tesla.
“Investors will have this flight to quality,” the Loup Ventures founder and managing partner told CNBC’s “Trading Nation” on Tuesday.
According to Munster, Apple’s long-term investors will benefit from advancements in 5G, improved content and software, and additions to wellness and augmented reality. However, he warns they’ll first have to cope with next Thursday’s quarterly reveal.
“The company has more exposure than any tech company in China,” he noted about Apple.
In Tesla’s case, Munster sees the electric auto maker, which reports next Wednesday, maintaining its attractiveness among consumers much like before.
Charts Show the US Could Reopen for Business in Three Weeks
The potential for the United States economy to reopen soon is now on the table. Although, according to CNBC’s Jim Cramer, it should be taken with a grain of salt.
After consulting with Larry Williams, the “Mad Money” host said that the renowned market analyst and trader made one of the “boldest contrarian calls” he had ever witnessed. Williams believes that officials could be free to loosen restrictive measures by May 12, or three weeks from Tuesday.
“I’m still very worried about this pandemic … but the charts, as interpreted by Larry Williams, suggest that the future might be brighter than we expect,” Cramer said. “I hope he’s right, although to me, this prediction seems like a real long shot. Who knows, though? Sometimes long shots pay off.”
The health crisis took its hold on the U.S. more than a month ago as COVID-19 spread quickly throughout the country. Businesses were ordered closed and residents in most states were asked to shelter in place as a means to contain the virus.
Williams based his timeline to begin relaxing shutdown mandates on the trajectory the virus took in countries such as Italy, Germany, South Korea and Iran. The outbreaks in those nations share a similar pattern, and it could be a sign that the U.S. could get the crisis under control within the next month, he said.
“Williams is not a wishful-thinking kind of guy. He’s a heavy-hitter,” Cramer said, “and his forecast [is] worth taking seriously.”