Stocks’ quarterly gain best since ’98
Repeat unlikely, investors advise
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 percent, bringing its gain for the quarter to nearly 20 percent. That rebound followed a 20 percent 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 and millions of people lost their jobs.
“It’s the first time you’ve had back-to-back (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 became increasingly hopeful that the economy can pull out of its severe, sudden recession relatively quickly. The hopes looked prescient after reports during the quarter showed that the job market swung back to growth and retail sales rebounded as governments relaxed lockdown orders meant to slow the spread of the coronavirus.
Stocks built on gains made toward the tail end of the first
quarter, when promises of massive amounts of aid from the Federal Reserve and Capitol Hill helped put a floor under the market. Low interest rates generally push investors toward stocks and away from the low payments made by bonds, and the
Federal Reserve has pinned shortterm 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.
Beyond the coronavirus, analysts also point to the upcoming U.S. elections and other risks that could upset markets. If Democrats sweep Capitol Hill and the White House, which many investors see as at least possible, it could mean higher tax rates, which could weaken corporate profits.