Brendan McDermid | Reuters
It might be premature to declare the bear market dead, but Thursday’s action sure checked off some important boxes.
Conventional Wall Street wisdom is that bear markets, or 20% declines from 52-week highs, die on bad news, and Thursday featured some of the worst the U.S. economy has ever seen.
Nearly 3.3 million Americans filed initial jobless claims for the week ended March 21, marking the worst week ever, by far. The second-worst number came during the 1982 recession, and the report released Thursday more than quadrupled that total.
Yet the market rose, violently so, at one point hitting 20% off the recent lows, which would define a bull market. That came just days after the longest bull market in history took the quickest fall into bear territory ever.
The thinking about bear markets dying on bad news is that the market is always looking ahead, and when it fully prices in all of the awful stuff out there, the selling will stop even if current conditions look bleak.
There wasn’t much sense to be made of the move Thursday, but it did spark talk that the worst of the market damage from the coronavirus crisis could be over.
“The markets and the economy don’t run in parallel. The market’s running way ahead of the economy,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “The markets don’t care about what’s happening today, the market cares about what’s happening six months from now.”
If that’s true, then it makes…
Lost your password?