Covid-19 raids reduce US stock returns.
Recent improvements in the US Coronavirus Case counts weighed the key averages with the on Thursday Dow, S&P 500 and Nasdaq Composite eking out modest profits in afternoon trading after sustained losses at the beginning of the session.
Market analysts took a longer term study of how a new wave of restrictions could affect stocks and the economy.
Here’s what four of them told CNBC on Thursday:
Joe Terranova, Senior Managing Director of Virtus Investment Partners, emphasized the market’s need for government support:
“Unfortunately, this is the kind of market behavior where fiscal policymakers actually really respond to their responsibilities. They know, if they want to examine the Great Depression and see what the lack of an answer looks like for capital markets, then they will understand what they are do here … remember to take this drive through the desert towards Las Vegas. You sit in the vehicle, comfortably drive that direction and finally see Las Vegas. The vaccines are in front of you. And suddenly the car stops and this one Fiscal policymakers say, “Go out and go.” I just don’t understand what we’re doing. We have to build a bridge. It has to come in the form of more loan programs, it has to come in the form of more support for small businesses and they have to act . And that’s exactly what the markets are currently doing. … We don’t need any restrictions from states or municipalities r basis of this resurgence. And I think there was a little bit of low expectations about it. So we see an increase there and unfortunately it is not answered with the type of response we get [had] in the second quarter the markets grew significantly. No, this is not a financial crisis. This is just a kind of stop of appreciation. And I believe that at some point we will rightly come back to the positive trend in risk assets as the liquidity in the system supports all risk assets. “
Simona Mocuta, senior economist at State Street Global Advisors, said vacation spending could offset the potential economic blow caused by the new Covid-19 restrictions:
“The good thing is that we’re already in the middle of the fourth quarter. These constraints, which you’re likely to see over the next few weeks, haven’t really hit the real economy yet, and you’re in a holiday season that, by default Spending tends to be focused these weeks, so I think if things get worse, the impact on consumer spending will actually be visible in the first quarter compared to now. Because, you know, Thanksgiving is coming, Christmas is coming. New Years. People will try to bring some joy into their lives and … can’t just sit in the basement. “
John Rogers, Co-CEO and Chairman of Ariel Investments, said a number of Names he bought during the March collapse turned out to be great bets:
“One of the things … I talk about a lot: our mutual friend Warren Buffett and his perspective, which you always think long term, and our capitalist democracy here in America is the best thing that has ever been invented. And we solve our problems. We’re getting through. And if you think with the forward-looking perspective, I believe you can make better decisions. So these companies were knocked down at the height of the pandemic. People didn’t believe in them. And it was an opportunity for some amazing brands to buy at bargain prices. “
Kanyi Maqubela, managing partner at Kindred Ventures, said certain trends that accelerated during the pandemic would continue over the long term:
“One of the most interesting things about this year … is that historically more than anything the market has hated uncertainty, and this has been an extraordinarily uncertain year, but with continued and robust growth. And so I guess what you are about to see now is, even though we are in the midst of a great deal of uncertainty due to the pandemic and we have some work to do due to the political situation, there is still so much liquidity in the market and there is still such a great transformation going on. So many consumer sectors. And what me interested is what happens to data centers, what happens to games, what happens to e-commerce, because all of these things continue to show extremely resilient growth even amid this uncertainty … What happened to Covid is that a number of trends are changing before Covid actually accelerated. For example, in e-commerce, e-commerce grew by 40% from Q1 to Q2 compared to the previous quarter ahr and we’re still only 16% compared to retail sales. So e-commerce itself is still so early on and you see a lot of benefits. The same applies to data centers and the public cloud. Forrester predicts it will grow another 30% next year. So these are actually worldly trends that have actually taken place independently of Covid and have only been accelerated. So I’m really interested in the relocation that some of these big aggregators are moving towards, for example in e-commerce and a growing number of small businesses selling digitally. And these types of trends are very resilient even to short-term market forces. “