Roundup: Fiscal stimulus measures expected to boost US stock market rebound
Xinhua News Agency, New York, March 10th, Summary: Fiscal stimulus measures are expected to push the US stock market to rebound sharply
Xinhua News Agency reporter Liu Yanan
The three major indexes of the New York stock market rebounded nearly 5% on the 10th as a result of the decline in market demand for hedging and investors expecting the US government to introduce fiscal stimulus measures.
However, the strength of the rebound was still significantly lower than the decline of more than 7% in the previous trading day. With the gradual impact of the new crown pneumonia epidemic on the US economy, the market outlook is still expected to face greater volatility.
Ed Mills, a policy analyst at Raymond-James Financial Corporation, said that although he believes the United States will introduce fiscal stimulus measures, the timing and size of the measures are still uncertain.
UBS Group economist Brian Rose believes that with increased testing, the number of confirmed U.S. patients infected with the new crown virus will rise sharply in the next few days and may cause the federal and state governments to take more aggressive measures to protect Public health. The Federal Reserve may reduce the federal funds rate to zero in the near future, but when monetary policy begins to take effect, the epidemic may have passed.
According to data from Bank of America Global Research Department, due to the impact of the new crown pneumonia epidemic on the supply chain, the throughput of US West Coast ports has dropped by an average of 10% in the past two months, and a 20% decline is expected before the end of the summer.
A report issued by UBS on the 10th said that the new crown pneumonia epidemic will have an impact on the economy in the short term, and the failure of the Organization of the Petroleum Exporting Countries (OPEC) to reach a new agreement with Russia on crude oil production has increased uncertainty. It decided to lower the S & P 500 stock index's 2020 EPS forecast from US $ 174 to US $ 165, and the EPS year-on-year increase is expected to decrease from 6% to zero.
The report also lowered the target point of the S & P 500 stock index in June 2020 from 3400 to 2900, and the target point of the index in December 2020 from 3400 to 3200.
UBS Group investment strategist Justin Weling said on the 10th that the current US bull market has begun to enter its 12th year. If the recent sharp decline in the stock market is the beginning of a bear market for US stocks, the speed of entering the bear market will be very fast. It is expected that the decline in the stock market is still in the middle range, and the downward trend in the second half may continue until 2021.
At the close of the stock market plunge on the 9th, the three major US stock indexes have all fallen by more than 19% compared with the all-time high set in February, and technically speaking, a cumulative 20% decline has entered a bear market.
However, Ross believes that although the short-term prospects of the US economy are worrying and economic growth may be negative in the second quarter, the strong underlying economic conditions may cause a rapid rebound after the epidemic is brought under control. Under the benchmark forecast scenario, the US economy will not enter a continuous downward cycle.