Not only us, but the investment giants in the US stock market such as Morgan Stanley are also of the opinion that the market will surely pick up its pace. Experts are of the view that the first half of 2020 shall end on at least a 5% high! We all know that the US stocks took a fall due to the outbreak of Coronavirus which drove away from the investors from these stocks to those less volatile assets in the market. By the end of January, the S&P 500 fell stood at its lowest of 3214. However, with the onset of February, the market has seen numerous highs and peaks even though the death toll for the Coronavirus reached 900 by the weekend. It is rightfully said that the coronavirus can delay the global economic boom but not derail the same!
Such trends in the S&P 500 and the possibility of market etching 5% growth in the coming 3-4 months are possible due to these few reasons –
Slow down of the contagion
Reports from China have arrived and they say that the spread of Coronavirus has been left limited now. The downward pressure on equities will surely move away with such a decrease in the pace of infection. The slowdown will pave the perfect way for the investors to take up more stakes in the market!
Experts believed that there were chances of the market taking a hit due to the US Presidential elections in November. However, Iowa caucus and Trump’s claim that there won’t be any major governmental change has assured that the market will remain stable. Any single party sweeping the majority will only affect the market due to the volatility in the fuel prices, other than this there remains no worry for the investors.
Blessing in disguise
The S&P 500 is known for tracking volatile stocks; however the “high-quality defensive growth characteristic” makes it a haven as per the reputation in the market. The risk premium of the index had fallen since it rose immensely two weeks ago when the outbreak of Coronavirus was pertinent. On the other hand, the realized volatility has spiked high which leaves hardly any gap between the two metrics.
Such graphs and stats only establish the fact that these are the perfect assets to invest in unless the world is facing a recession period again. Given the trends of the market, such a situation doesn’t seem possible! The chances of the S&P 500 to jump over 3500 till June doesn’t look impossible. You as an investor need to make wise calls and not panic based on the word of mouth in the market. Experts have got your back!