Original Title: [US Stock Closing] Bear Market Rebound Warning: US Stock Ends Lower in the Shock and the Dow Jones Industrial Average Gives Back Over 900 Points of Increase Source: FX168
FX168 Financial News (Hong Kong) - After Wall Street evaluated the latest news about the COVID-19 epidemic, the US stock market gave up its intraday gains on Tuesday (April 7) and closed lower.
The Dow Jones Industrial Average closed down 26.13 points, or 0.1%, at 22653.86. The average price of 30 stocks rose as high as 937.25 points, or 4.1%. The previous trading day, the Dow hit the third largest point increase in history; The S&P 500 index closed 0.2% lower at 2659.41, up more than 3% previously; The NASDAQ Composite Index fell 0.3% to 7887.26, having previously risen 3%.
Some investors believe that the stock price has exceeded the reality. After the second quarter, the aftereffect of the COVID-19 epidemic may bring significant pressure to the economy. The main stock indexes rebounded about 20% from their lows on March 23.
In the morning trading of US stocks on Tuesday, the main stock indexes rose. David Kostin, chief equity strategist of Goldman Sachs, said: "From the current situation, downside risks outweigh upside opportunities. I would like to remind investors that there were many different rebounds in the fourth quarter of 2008 (during the Great Depression), which I call bear market rebound, some of which almost reached 20% - but the market did not bottom out until March 2009."
In recent days, the number of confirmed cases of new coronaries in the United States seems to have dropped from its peak. On Tuesday, New York Governor Andrew Cuomo reported that although the death toll in New York State had the largest increase in a single day, the number of inpatients was decreasing.
Investors' optimistic expectations helped US Treasury yields climb on Tuesday. The yield of benchmark 10-year US treasury bonds rose 5 basis points to 0.72%, and the yield of 30-year US treasury bonds rose 1.33%.
In Europe, Italy and Spain are the two most affected countries, and the number of new cases is also decreasing. In Asia, South Korea reported fewer than 50 new infections for the second day in a row. As of April 6, there were no new deaths in China, the first time since the release of daily epidemic data in January this year.
According to the latest data from Johns Hopkins University, the United States is still the most severely affected country in the world by the new pandemic. At present, more than 386000 people have died, and at least 10000 have died.
The stock market is still in a bear market, with the S&P 500 down about 20% from its historical high. Many people on Wall Street believe that as the outbreak of COVID-19 almost brought the global economy to a standstill, the stock market has not yet fully digested the expectation that corporate profits may decline significantly.
"My concern now is to avoid the economy falling into depression," said Alex Chalekian, CEO of Lake Avenue Financial. "I won't be surprised if the S&P 500 hits 2000. We will eventually see opportunities and make rational use of them. At the same time, we are not in a hurry to return to the market."
Keith Lerner, chief market strategist of Trust/SunTrust Advisory, said: "After hitting the low point at the end of March, the market reached the peak of random selling. This is the first step in any kind of bottoming process. Then, you begin to see the polarization of the market."
President Trump of the United States said at a news conference on Monday that "the end of the darkness is the dawn". Ten different therapeutic drugs are being actively tested, and research on the development of vaccines and treatment methods has been "accelerating at an incredible speed".
