Why the Stock Market Was Bullish on Thursday

April 3, 2020
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U.S. stock indexes closed in the green on Thursday, bringing confidence after the recent selloffs. While the markets and the wider economy are not yet out of the danger zone, there are some reassuring signals that investors should be aware of.

All Major Indexes Report Growth

Thursday gave evidence that there’s still plenty of positive activity in the stock market.

  • The Dow Jones Industrial Average closed with a 2.24% gain over Wednesday.
  • The NASDAQ Composite was up 1.72%.
  • The S&P 500 was up 2.28%.

These figures are extremely important, especially when considering that around 10 million U.S. workers have filed for unemployment in the last two weeks. This has been the highest unemployment spike ever witnessed in the U.S.

Sadly, the economy could get worse before it gets better, especially with the Coronavirus outbreak yet to reach its peak. However, for investors, several factors are contributing to bullish sentiment.

The Stimulus is Working

The $2 trillion stimulus plan is working for now. Hundreds of billions have been allocated for business loans and unemployment benefits. This will help to keep smaller companies afloat. People that do lose their jobs will have support during this difficult time.

The stimulus is doing its most important job: preventing a widespread economic and financial market crash.

The Bad News Has Been Factored into Stocks

Major financial and global news headlines have been nothing short of distressing in recent weeks. The Coronavirus is claiming tens of thousands of lives and putting millions out of work.

There’s no bright side to this situation. It will be the biggest test for society and the global economy since the Second World War.

However, the bad news has already sent stock prices downwards. The current conditions are factored into market prices. This means that investors are now looking for growth opportunities. Stocks could still go lower, but there’s a firm belief that the upside is inevitable. When looking at past financial disasters, everything suggests that a recovery is possible.

There’s Evidence That the Coronavirus Can be Contained

The United States was relatively slow to respond to the Coronavirus and is now playing catchup. Infections and fatalities are yet to peak, so the coming weeks will be difficult. China and South Korea have shown that strict containment methods work. Infection numbers in these nations are stabilizing. Even in Italy, which was recently the epicenter of the global outbreak, the numbers are starting to flatten out.

Fearful investors should know that the situation is serious, but it’s not going to last forever. Investment decisions should be painstakingly calculated. Bargain opportunities exist, and it’s important not to sell based on emotions and speculation.

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