A stock market rally today, Dow today is up more than 600 points
All three major stock indexes have gains of more than 2%, as of 3:27 PM
Wednesday, April 8, 2020, Eastern Time (ET). What is the reason for today’s stock market rally?
“U.S. stocks were rising on Wednesday with investors hoping that the U.S. could roll back containment measures put in place to fight the COVID-19 pandemic sooner than expected.
The buoyant sentiment in stocks also may have reflected the announcement that Bernie Sanders had suspended his campaign for the U.S. presidency, leaving former vice-president Joe Biden to compete with President Trump in November’s elections.”
Why a stock market bottom is yet to be confirmed
Stocks rise today. But for all stocks now this is just irrational exuberance. We wrote yesterday about Boeing stock. Shares of Boeing continue to rise today, half an hour before the close of the trading session. We will soon have the quarterly earnings reports to evaluate the negative effect of the coronavirus outbreak.
Tomorrow we will have the weekly numbers for the US initial jobless claims and continuing claims. A better than expected figure is considered positive for the US economy. But any negative surprise may lead to profit-taking for stock trading, stock investing.
I think that the momo effect (momentum trading) is now responsible for the recent bounce in the stock market. But I am not sure that the stock market has fully discounted the negative results in profitability, cash flows and valuation for stocks yet.