Today the Dow and the S&P 500 were up over 4%. Monday indices were up around 5%, but then prices retreated on Tuesday and investors wondered if Monday was an aberration.
It is very possible that today’s gain could indicate that the market decline last week and Tuesday of this week was not JUST about the coronavirus.
Yesterday was Super Tuesday in the election primaries and former Vice President Biden went from an almost forgotten candidate to taking the lead from Senator Sanders last night. It is not as if the market loves Joe Biden, but Senator Sanders as President could bring a more socialistic bent to the US economy. It would be quite possible that this type of economy would grow less so the market could have been reacting to Senator Sanders being the front-runner last week as well as the spread of the coronavirus. A Trump-Biden election has a lower risk to economic growth and resulting coming profits which drive the stock market than a Trump-Sanders election.
The stock market has been extremely volatile day to day, but at some point things will settle down, whether it be political factors or coronavirus factors, and the market may go back to reflecting the underlying economic story.
