facebookS&P 500 Index has seen a growing trend since 23 Mar 2020 and is even reaching its pre-COVID levels. What are your thoughts? Will other indexes be likely to experience this level of recovery as well? - Seedly

Anonymous

09 Jun 2020

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General Investing

S&P 500 Index has seen a growing trend since 23 Mar 2020 and is even reaching its pre-COVID levels. What are your thoughts? Will other indexes be likely to experience this level of recovery as well?

Many people have said that stock markets are likely to experience slow recovery over a long period of time. What do you think?

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Ng Wei En

09 Jun 2020

Analyst at Mastercard

What you just mentioned about a slow recovery over a long period of time is not necessarily what will happen to the stock market but more accurately, the economy.

In the past, performance of stock market can be correlated with relatively high confidence to the state of the economy, be it unemployment numbers, GDP growth, etc. However, the COVID-19 situation has shown that there's a detachment in the the stock market performance with what is actually happening to the economy. The stock market is driven by buyers and sellers and any growth or decline you see in stock markets is merely a reflection of the sentiments of the market participants(e.g retail investors and instiutional investors).

I mean, one can be overly optimistic about the future despite the economy being in dire straits right? This could perhaps be due to the fact the US Federal Reserve has demonstrated unlimited firepower with its commitment to buying up debt from the economy.

So perhaps one can look towards how committed the government is to help businesses to determine if sentiments are bullish/positive which will then lead to a recovery in the stock market. Just my 2 cents.​​​

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