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Stock market commentary for April 30, 2020

Stock market news

A stock market rally on treatment hopes about coronavirus sent all three major stock indexes closing up with gains more than 2%. Dow gained more than 50o points. The US stock market at close on April 29, 2020:

Dow: 24,633.86 532.31 2.21%
S&P 500: 2,939.51 76.12 2.66%
Nasdaq: 8,914.71 306.98 3.57%

Source: Marketwatch

The stock market ignores the state of the economy, it is not logical

With the recent stock market rally, stocks tend to ignore all the negative economic news that are fundamental for the valuation and prospects of stocks. The US GDP contracted 4.8% for the first quarter of 2020 on an annulaized basis, the unemployed persons ahve surpassed allready 26 million, the Fed warned about decline in the economic activity, companies avoid to make a guidance about the rest of 2020. Still bottom fishing in stocks and the fomo effect are dominant. When greed rules over fear this is not sustainable. Take for example the airline stocks which rallied on April 29, 2020. These stocks have a very uncertain economic outlook for the rest of 2020, and some companies without the support and aid of the US government may have filed for bankruptcy. This does not make sence from a fundamental and valuation analysis. But trading is different than investing.

The stock market ignores for now bad news, this is worrying

What about stocks that have rallied and may soon file for bankruptcy? Same story here. Traders have bought stocks ignoring the fundamentals of stocks.

Stock news

Chesapeake Energy Corporation (CHK) stock daily chart
Chesapeake Energy Corporation (CHK) stock daily chart

Chesapeake Energy Corporation (CHK) stock closed at 26.85-2.33 (-7.98%).

“Exclusive: Chesapeake Energy preparing bankruptcy filing – sources”

Source: https://finance.yahoo.com/news/exclusive-chesapeake-energy-preparing-bankruptcy-020713241.html

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