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Ask HN: What is happening with the stock exchange in the last two days?

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The stock exchange has been closing with high increases in the last two days and to me it looks completely irrational. Right now it is clear that the impact of the virus has been greatly underestimated and that it could be greater in USA with respect to Europe. Despite this incertainity the stocks exchange has been closing with high positives in the last two days. Why is it so? Did we already reach the bottom and are we stabilizing? What do you expect in the next 3 months?

16 comments

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ohiovr
Looks like a bear rally:

https://www.investopedia.com/terms/b/bear-market-rally.asp

Some previous bear rallies have lasted for weeks (like in 1933)

There are some strong forces in the future including 5 trillion dollars in stimulus, a bottom forming in energy, and Saudi Arabia folding its hand (cards) within the next month. And of course the virus and its mostly predictable and a few unfathomable and unpredictable outcome possiblitys.

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moxd 

  |  it looks completely irrational.
yes
superflit
People like me are buying.

Because people will still pay interest.

And even if some "bailout" happens the money will go straight to the banks.

So why not buy a very discounted financial institution now and then get the rise on stock by govt bailout?

Spooky23
Because the situation is out of control and the madman President of the US doesn’t have the ability to establish confidence.

Any outcome is possible right now, including nationalizing a shitshow too big to fail bank.

You’re better off speculating in consumer staples that are cheap. There’s a lot of misery ahead, places like McDonalds are a potential good investments. Still better if you have cash is to wait for the waves of bankruptcies and whatever emerges.

For example, every US state that depends on income taxes is broke for the next quarter (the deadline for taxes was pushed to July), and the relief bill doesn’t close the gap. That alone will impact Medicaid payments and municipal government.

taway555
shorts taking profits.. remember, you have to buy to close a short position.
marketgod
It's a fake out wait for the pull back. Maybe tomorrow when they announce the jobs number. Today the DOW fell by 800 points to close. Most the major stocks were hitting strong resistances and failed. This looks like a pull back to me. I was short on $DIS and getting hammered but it still looks like that may pay for Apr 17.

Let's see how Friday closes. We need to close above resistance levels for key stocks/indexes.

rasz
tomorrow? wait till US registers >1K dead per day
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deanmoriarty
Not saying that you are wrong but, what makes you so confident? Italy has been almost approaching 1,000 deaths a day for a few days now, and yet their stock market has been rising ~12% since March 20th, after dropping 40% since February. Why wouldn't their market drop more since they have so many deaths with no sign of stopping?

I am fully expecting the stock market to drop more as we move forward, but it's much less clear to me how one specific event (like the one you or gp are mentioning) could have a direct impact on tomorrow's prices.

In 2009 the market started recovering way before the real damages to the economy started disappearing (e.g. unemployment rate actually went back to ~5% just in 2015, and by that point the stock market was in full rebound for years).

marketgod
That's the thing with the market. Whatever you think is right is wrong. That's why most people lose when day/swing trading.

For example this jobs report that came out should have caused issues since the numbers were crazy and that was as of Saturday. Next week it is going to be way worst but the market brushed it off. The market is not rational.

hkiely
We now have several rapid diagnostic options including disposables. There is much less cloudiness on the scientific front. I’m not sure why else.
twoquestions
Can anyone tell me why stocks are up after 3.2m new jobless people as of 3/21, and 10 year treasury yields are down? It looks like people are rushing towards both stocks and 10 year notes.
Gustomaximus
Naturally no simple reason but I would say many people feel the rapid drop was overdone and put stocks into good value territory. Also might be people looking to park cash, especially 10 year notes.

Personally Im mixed. Given how inflated stocks are at historical earnings and the severity of covid to the economy you'd think this drop will go much further. A couple months lockdown might really push a new reality. But offset that to even lower intrest rates coming, surely more and more quantative easing and a current view to somewhat prioritise the economy over people....who knows.

daleco
I read that the stimulus bill is offering a forgivable loan for small businesses if they don’t layoff. Basically taxpayers paying for employees salary. Let me see if I can find the source...

This could be one of many reasons.

[edit] here we go, forgivable loan of up to 10 million, based on the company payroll https://www.inc.com/kevin-j-ryan/inc-chamber-of-commerce-sma...

evoneutron
Markets are highly volatile and largely driven by emotions. The impact is not yet fully seen and will manifest in the next 6-12 months. In the short-term, cash is the most valuable asset. In the long-term, it doesn't matter as much.