Financial Markets Commentary 2nd Quarter 2020Submitted by Capital Strategies Financial Corporation on July 29th, 2020
Stock prices rebounded sharply last quarter as investors began to anticipate the eventual economic recovery. Whether the recovery actually comes to pass as soon as the market is hoping is another thing entirely, but it is important to remember that the stock market is a discounting mechanism. In other words, it represents the collective expectation of participants.
A great deal of money moved out of the market back in March as a result of virus-related fears. That money does not influence prices until it re-enters the market, which it has been doing steadily since May. Those inflows have provided a cushion for the market on most down days and extra fuel on good days.