US stocks rise even as economy faces large pullback in capital spending

Markets were mixed on Friday.

The S&P 500 rose 1.4 percent but the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.9 percent.

US stocks rose despite a report on Friday showing that US orders for durable goods tumbled 14.4 percent in March.

Lydia Boussour, senior US economist at Oxford Economics, wrote that the impact of the COVID-19 pandemic “will translate into some of the largest pullbacks in capital spending of all time”.

In Europe, BofA said that it expected stocks to gain a further 20 percent as “the root cause of the economic slump - the spread of Covid-19 - is fading”.

However, Hannah Anderson, global market strategist at JPMorgan Asset Management, warned that progress in combating the virus is “not the same as returning the economy to the place it was last fall” and said “investors should expect more volatility across all asset classes”.

Similarly, Hugh Young, managing director for the Asia Pacific region at Aberdeen Standard Investments, warned that markets “have not accurately priced in the risks” and that “the economic consequences are actually huge of what’s going on”.