INSTANT VIEW 3-S&P 500 trades at all-time high, ends pandemic slump

Aug 18 (Reuters) - The S&P 500 index hit an all-time intraday high shortly after the open on Tuesday, highlighting a dramatic rebound that has come in the middle of a global coronavirus pandemic and widespread economic devastation.

The index reversed the initial gain and was last off 0.1% at 3,378.51. It is still up some 54% from its low on March 23. The S&P has hovered just under the record for several days and briefly traded above its all-time high close at 3,386.15 last week, but failed to best its record high at 3,393.52 set the same day on Feb 19.

If the index ends the day higher than its old record close, it would confirm that it has been in a bull market since the pandemic low.


“This is certainly a circumstance where capital markets are looking beyond the current earnings and economic chasm that have been created by the economic shutdowns in response to COVID-19. Capital markets are looking to 2021 and 2022 levels of recovery with a degree of optimism that there is a health solution around the corner.”

“It’s certainly aided by the fact that we have been supported by historically low interest rates and very accommodative policy. Not only from a monetary standpoint, but from a fiscal policy standpoint – both, here in the United States and abroad. The policy responses have been incredibly forceful and provided a necessary bridge through this voluntary economic shutdown as we deal with these conditions created by the pandemic.” NEIL WILSON, CHIEF MARKET ANALYST, MARKETS.COM, LONDON “We saw a pullback in June and it’s been steadily marching forward since, so that record was on the cards. I‘m still surprised we got there without additional stimulus. But my instinct, is that this is too high, it looks massively overbought, I mean, it’s not sustainable looking at the earnings. I think it’s mainly the liquidity being pumped into the system, all these funds need to go there. As we get closer to the election I’d expect more volatility and a pullback”. BENJAMIN JONES, SENIOR MULTI-ASSET STRATEGIST AT STATE STREET GLOBAL MARKETS

“Though US equities are back to all-time highs there is a great deal of dispersion in returns for the year and the style, sector, and stock level. Growth, tech, and internet retail for example have posted solid gains this year as we have seen existing trends towards a greater reliance on technology accelerate in the wake of the pandemic.”

“I am not concerned that tech has driven a lot of the gains and that the largest five stocks make up such a large proportion of the S&P 500. These are firms that have solid fundamentals that are superior to the broader market and will benefit from recent trends. We do not find that this high concentration is a source of systemic risk.” BRIAN PRICE, HEAD OF INVESTMENT MANAGEMENT, COMMONWEALTH FINANCIAL NETWORK, WALTHAM, MASSACHUSETTS (EMAILED)

“The path of least resistance seems to be higher for US equities as of late. Markets are seemingly encouraged by a nationwide improvement in coronavirus data after a spike in various parts of the country last month. Big tech and certain consumer companies like Amazon continue to do well but we’ve also seen an improvement in relative performance of cyclical and value-oriented names as of late. This dynamic should be viewed as healthy for the equity market as wider breadth could be key to determining whether or not stocks will continue their advance. There are plenty of risk factors that investors will continue to monitor, such as a resurgence in coronavirus cases, failure to pass another relief bill, and the upcoming elections. Investors are encouraged that we’re back near all-time highs in the market, but they’ll need to stay vigilant for what lies ahead over the coming months.” JIM PAULSEN, CHIEF INVESTMENT STRATEGIST AT THE LEUTHOLD GROUP IN MINNEAPOLIS

“I don’t know if I’d put a great deal of significance on this. It’s important in the short run particularly for traders. There’s no doubt about it. We have these psychological levels that are important for traders because markets move around them.”

“I’d put this in the same category as when the market is looking at a 200-day moving average. It’s a technical level that creates trading opportunities for shorter-term minded traders. It could create volatility. It could be a launching pad if it breaks through solidly to create a good few days on the upside but it could also mark a point where you want to sell for the next week. Often when we break a milestone we pause. All of that is true. TIM GHRISKEY, CHIEF INVESTMENT STRATEGIST, INVERNESS COUNSEL, NEW YORK

“It was inevitable. Markets go higher over the long term, and it’s a reflection that the pandemic has limited longevity and the economic downtown will also have limited longevity. There are companies that are doing well in this environment, and even doing better, primarily the growth stocks, which are not impacted by the decline in consumer spending.”

“It’s an emotional level. It’s a market rebound a lot of investors don’t understand and are skeptical about. But the stock market is about anticipating the future and we feel in about a year or so most of the population will be immunized with a vaccine, and the economy will begin to return to accelerated growth.” KEITH LERNER, CHIEF MARKET STRATEGIST, TRUIST/SUNTRUST ADVISORY SERVICES, ATLANTA

“It does confirm what we’ve been saying for several months: that this is a new bull market that we’re in. There’s mounting evidence in our work that suggests we’re in a bull market as a whole. We’ve been positive, increasing equities, since early April. So far what we’ve been seeing in this market is very consistent with what we tend to see coming out of meaningful lows. The one thing that’s different…this is by far the fastest recovery we’ve seen from a 30% decline.”

“In some ways, the market making a new high, along with (COVID-19) cases coming down, actually relieves some pressure on Congress to get something done (on renewing stimulus). That could be something in the short term that weighs on the market. Ultimately I think something will get done. I don’t think it’s a long-term risk.” BRIAN BETHUNE, ECONOMIST, TUFTS UNIVERSITY, MEDFORD, MASS

“The problem we’re dealing with is the Fed has clobbered rates down across the yield curve. So where are people going to earn a return? The reason they’re going into the S&P 500 is because there’s a dividend yield and a buyback yield. There were some cutbacks so my guess is that the gross yield is down to 3%, that’s still 3%. So people are realizing this and now the funds are shifting out of fixed income into equities, and that creates a momentum play.

“Given the situation we find ourselves in, that’s a good thing, no question. I don’t buy into the view of the people who say it’s a bubble, it’s the reality of what’s going on in terms of zero returns on fixed income.

“The economy, generally speaking, is doing better than what people had expected. That’s the second piece of what is propping up the stock market. There was an over-correction on the downside and once people realized it was overdone, then it returned.”

OLIVER PURSCHE, PRESIDENT, CIO, BRONSON MEADOWS CAPITAL MANAGEMENT, FAIRFIELD, CONNECTICUT “The S&P 500 has been trying to make that new record for a while. We don’t know yet whether we’re going to close above it. But today’s housing starts number is clearly what’s lifting stocks a little today. Very strong earnings by Walmart are also helping the S&P. Those are the catalysts. It’s a slow melt up; it’s really a summer melt up.

“It’s too early to tell, because data keeps on changing, what coronavirus is going to look like in September, October, November, but the market is clearly betting it’s not going to be all that bad.” (Compiled by Alden Bentley and the U.S. Markets team.)