The market is “driven by sentiment” and is overvalued, warns a veteran strategist.
“The rally that has occurred, it still occurs after major crises, but going back to the beginning of time, we have never seen a dip in a stock market in the six months after a 30% sale leading to a recession, “James McDonald, CEO of Hercules Investments, told Yahoo Finance.
the worst monthly job report since the Great Depression that companies are cutting jobs amid the coronavirus pandemic. The Dow (^ DJI) and S & amp; P 500 (^ GSPC) & nbsp; and Nasdaq (^ IXIC) each increased by more than 1.5% during the session and ended the week on the rise. “data-reactid =” 19 “> On Friday, markets rallied on the same day as the worst monthly employment report since the Great Depression, as companies cut jobs during the coronavirus pandemic. The Dow (^ DJI) and the S&P 500 (^ GSPC) and Nasdaq (^ IXIC) each increased by more than 1.5% during the session and ended the week earlier.
fueled much of the rally. On Thursday, the Nasdaq wiped out its 2020 losses and went into positive territory for the year. Pay Pal (PYPL), Platoon (PTON) and Twilio (TWLO) all reached new heights this week after their quarterly results. “data-reactid =” 20 “> Technology and healthcare fueled much of the rally. On Thursday, the Nasdaq wiped out its losses from 2020 and moved into positive territory for the year. PayPal (PYPL), Peloton (PTON) and Twilio (TWLO) all reached new heights this week after their quarterly results.
“People are always optimistic in these sectors [tech and health care] as far as they survive this crisis, and what will happen, I think, is that we are going to see a rotation of these sectors towards money, “said McDonald.
“Regardless of technology and healthcare, if you look at the valuations right now, we are double the measure of price profit growth in terms of stock market value, compared to prospective profits. This has never been the case before, “said McDonald.
“Today, the market is 50% more overvalued than it was at the height of the dot com crisis. I think what we’re seeing right now is very temporary, and the best investment right now is put options. “
Some strategists say Federal Reserve and government stimulus measures will prevent markets from March 23 lows. “data-reactid =” 24 “> Some strategists say that the Federal Reserve measures and the government stimulus measures will prevent the markets from retesting the March 23 lows.
“I don’t think the Fed is the solution to this. In fact, I think all of the liquidity injections have created a false hope that market valuations remain intact or even stabilize – This market will fall faster and harder as a result of these liquidity injections, “said McDonald , which predicts an adjustment rate of 15%.
“If we close half of the small businesses, if we have a third of the unemployed population, incomes will fall and these ratios must fall. We cannot have artificial valuations of the stock markets, “he added.
Stock Market News Live: Wall Street Takes Up As Data Shows Historical Jobs Crash]”data-reactid =” 27 “>[Readmore:[ReadMore:[Lirelasuite:[ReadMore:Stock Market News Live: Wall Street Takes Up As Data Shows Historical Jobs Crash]
In April, a huge payroll of $ 20.5 million was lost while unemployment climbed to 14.7%.
highlight what could be “a silver lining” in the gloomy US employment report – 18.1 million people declared that they were laid off “temporarily”, which means that they expect to find their job. How long are the layoffs states begin to reopen. “data-reactid =” 31 “> Economists point out what could be” a silver lining “in the bleak US employment report – 18.1 million people said they were on” temporary “layoffs, which means that they expect to find their jobs How It remains a long time to see the layoffs as states begin to reopen.
“The consensus is that when we turn on the lights again, we will likely see between 30% and 40% of these jobs that will not immediately return online,” said Anthony Chan, former chief economist at JPMorgan Chase. Yahoo finances.
Chan believes that new jobs will emerge in healthcare and technology, while opportunities involving more social distance jobs will take longer to rebound.
“Now we are much more sensitive to health security and the type of risks, we are more focused on building our health infrastructure,” said Chan. “And of course, health, and we will work in partnership with technology.”
@ines_ferre“data-reactid =” 35 “>Ines covers the American stock market from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre
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