David A. Grogan | CNBC
Veteran Wall Street trader Art Cashin told CNBC that the Federal Reserve’s big announcement on Thursday would propel stocks up, but warned that a full recovery from coronavirus-induced liquidation will take time.
“For now, the entry of the Fed into the variable capital sector has given the market a breath of fresh air,” said Cashin on “Squawk Alley.” “We traders who came this morning thought … that the market could start to stabilize here.”
“But we have had a second wind from the Fed,” he added.
Before the stock market opened, the Fed released details of its highly anticipated loan program on Main Street and other initiatives, totaling $ 2.3 trillion in loans to help businesses and municipalities.
Cashin’s comments came as US stocks continued to rally after Wednesday’s gains. The Dow Jones Industrial Average rose more than 400 points, or almost 2%.
The blue chips seem poised to post their best weekly earnings since 1938.
Cashin said he doesn’t expect a V-shaped recovery – rapid descent, rapid climb – on Wall Street.
A U-shaped or “probably even L-shaped” recovery is more likely, said Cashin, “because even if you open all the bars or restaurants or cinemas, are people going to flock there if the disease is still present? I think that ‘there will be some hesitation. “
On the other hand, Cashin said that a concrete announcement that a drug to treat COVID-19 would soon be available would help a market recovery “that would greatly open your eyes”.
His last appearance on CNBC was on the morning of February 13. He was in a car accident that night. He broke his hip and is in rehab.
The director of UBS ground operations at the NYSE gave his first public comments on the sale of the stock market coronavirus to CNBC’s Bob Pisani earlier this week.
When Cashin was injured in February, the Centers for Disease Control and Prevention had only confirmed the 15th case of COVID-19 in the country. There are now more than 432,000.
At the time, Cashin advised investors to watch for declines in freight shipments as a sign of possible economic contraction. He correctly said that a further spread of the virus could eventually become “a problem” for markets and the economy.
Cashin, whose career on Wall Street began almost 60 years ago, said he is looking forward to the reopening of the New York Stock Exchange. The NYSE switched to fully electronic commerce on March 23 due to the coronavirus.
“The cause of its closure was related to health, so you cannot dispute that,” he said. “But I would certainly like to see it reopen. I think we are missing some aspects of the market.”
Traders can get a better idea of the market by being on the NYSE floor, said Cashin.
“I think you are starting to feel the feeling of traders who think you need the market,” said Cashin, who also noted that a partial exemption had to be granted recently for a company to go public.
“I think it represents the value that humans, we humans, can add at certain critical and strange moments,” he said.