Last week the headlines were about as bad as our country has ever seen, with the White House anticipating as many of 240,000 deaths due to the COVID-19 pandemic. The LPL strategists discuss the recent news, along with the reasons this bounce appears to be a bear market rally and may be due for another move lower over the coming weeks.
How bad will it be?
According to the US Bureau of Labor Statistics, almost 10 million initial claims for unemployment were filed over the past two weeks, nearly matching the number of total claims filed each year over the past few years. The LPL strategists agree we are in a sharp recession, and the economic data is only going to get worse over the coming months. If there is any good news, the market is a forward-looking mechanism, and although the headlines will be poor, the market already could be looking ahead to better times.
With all the negative headlines last week, stocks held fairly tough, losing only a few percentage points. The LPL strategists still expect a potential move lower over the coming weeks, though, as history is littered with large market crashes, a solid bounce, then a retest of the lows. As of now, we see no reason to think this bear market will be any different.
According to various news reports over the weekend, there were less new COVID-19 cases in New York, and various positive reports from doctors on medications that can be used to help combat the COVID-19 virus. We are a long way from a cure, and this week could be one of the worst weeks in our country’s history. We are nearing a potential peak in the number of new cases in the United States, which could be one of the most important things needed for us to finally see a path out of this horrible pandemic.
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