Chicago Sun-Times

MON­STER QUAR­TER FOR STOCKS

Big­gest gains since 1998 fol­low big set­back in March

- BY STAN CHOE, ALEX VEIGA AND DAMIAN J. TROISE Business · Finance · Stocks & Markets · Wall Street · S&P 500 · Infectious Diseases · Financial Markets · US Stock Markets · Americas Stock Markets · Health Conditions · Federal Reserve System · European Union · United States of America · Northwestern Mutual Financial Network

Wall Street capped its best quar­ter since 1998 Tues­day with more gains, a fit­ting end to a stun­ning three months for in­vestors as the mar­ket screamed back to­ward its record heights af­ter a tor­rid plunge.

The S&P 500 climbed 1.5%, bring­ing its gain for the quar­ter to nearly 20%. That re­bound fol­lowed a 20% drop in the first three months of the year, the mar­ket’s worst quar­ter since the 2008 fi­nan­cial crisis. The plunge came as the coro­n­avirus pan­demic ground the econ­omy to a halt.

“It’s the first time you’ve had back-to­back [quar­ters] like this since the 1930s,” said Wil­lie Del­wiche, in­vest­ment strate­gist at Baird. “It’s pretty un­prece­dented.”

The whiplash that ripped through mar­kets in the sec­ond quar­ter came as in­vestors looked be­yond dire unem­ploy­ment num­bers and be­came in­creas­ingly hope­ful that the econ­omy can pull out of its se­vere, sud­den re­ces­sion rel­a­tively quickly. The hopes looked pre­scient af­ter re­ports showed em­ploy­ers re­sumed hir­ing and re­tail sales re­bounded.

The quar­ter’s gains were ig­nited by prom­ises of mas­sive amounts of aid from the Fed­eral Re­serve and Congress. Low in­ter­est rates gen­er­ally push in­vestors to­ward stocks and away from the low pay­ments made by bonds, and the Fed­eral Re­serve has pinned short-term in­ter­est rates at their record low of nearly zero.

But most of Wall Street says not to ex­pect any­thing close to a re­peat of the rock­ing sec­ond quar­ter. A rise in in­fec­tions has sev­eral states paus­ing their lift­ing of re­stric­tions. The surge in con­firmed new cases, which has prompted the Euro­pean Union to bar U.S. trav­el­ers from en­try, is seed­ing doubts that the eco­nomic re­cov­ery can hap­pen as quickly as mar­kets had fore­cast. That helps ex­plain why the mar­ket’s mo­men­tum cooled some­what in June.

The S&P 500 has ral­lied back to within nearly 8.4% of its record set in Fe­bru­ary, af­ter be­ing down nearly 34% in late March. At one point this month, it had climbed as close as 4.5%.

“Broadly speak­ing, the mar­ket is re­act­ing to eco­nomic data that is bet­ter than ex­pected,” said Brent Schutte, chief in­vest­ment strate­gist at North­west­ern Mu­tual Wealth Man­age­ment.

Schutte said the mar­ket is be­ing sup­ported by the like­li­hood that there won’t be a na­tion­wide shut­down again, ag­gres­sive mon­e­tary pol­icy and hopes for a vac­cine sooner rather than later. “The path of least re­sis­tance is still two steps for­ward, one step back,” he said.

 ?? MARK LEN­NI­HAN/AP ?? The New York Stock Ex­change is shown Tues­day. Stocks re­bounded in the sec­ond quar­ter af­ter ex­pe­ri­enc­ing their worst first quar­ter since 2008.
MARK LEN­NI­HAN/AP The New York Stock Ex­change is shown Tues­day. Stocks re­bounded in the sec­ond quar­ter af­ter ex­pe­ri­enc­ing their worst first quar­ter since 2008.

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