The markets today, viewed several hours before opening, appear likely to continue recovering from the tech rout. If today’s job reports show improvement, that could add to the recovery.
Yesterday, tech-related stocks lead gains on the DOW after leading down during the rout.
It is reasonable to believe that there will be more roller-coaster rides. There is a danger in attaching a single explanation to these rides when in fact several factors are contributing to them. At or near the top of the list is the overvaluation of some stocks, and as well as uncertainty over a successful vaccine.
Certainly, the list includes job losses and a serious questioning as to how many jobs can be replaced. Many jobs will not re-appear in the post-pandemic world.
We also don’t know the total net impact of job losses and the accompanying increase in personal debt on blue-chip stocks including banks. Major banks have made loan loss provisions, but we will have to wait several quarters to see whether the provisions were sufficient, or even more than actually occurred.
And, of course, the federal election. If you ask ten economists for their analysis of the effect that the Washington goings-on has on the market, you are likely to get 15 answers.