Markets soared on Tuesday.
The S&P 500 surged 9.4 percent, the STOXX Europe 600 jumped 8.4 percent and the Nikkei 225 rose 7.1 percent.
Sam Stovall, chief investment officer at CFRA Research, said that “this market was stretched like a rubber band that, at least in the near term, was ready to snap back”.
Investors appear hopeful that the US Congress will be able to agree on a fiscal package soon to mitigate the impact of the COVID-19 pandemic even as President Donald Trump raised the idea of restarting the economy soon.
Indeed, with all the monetary and fiscal stimulus initiated or planned, JonesTrading’s chief market strategist Michael O’Rourke warned that “it is getting dangerous to be negative on equities at these levels”.
“Nobody should be surprised if the next moment of panic leads to a special purpose vehicle to buy stocks and equity ETFs,” O’Rourke said. “While the long-term ramifications of these measures are dangerous, the short-term liquidity will be strong. If there was ever a time not to fight the Fed, this is it.”
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