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U.S. markets erase losses, but more volatility on the way, experts say
From:Xinhua  |  2020-06-17 09:33

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by Matthew Rusling

WASHINGTON, June 16 (Xinhua) -- U.S. markets made a comeback on Monday and Tuesday, erasing last week's massive losses. But with a COVID-19 vaccine still months away and an uptick of cases on the horizon, experts expect highly volatile U.S. markets in the near future.

U.S. stocks snapped back Monday and Tuesday after last week's sharp drop. Much of this was on the announcement earlier in the day that U.S. retail sales increased 17.7 percent -- beating some estimates.

But the market has seen much volatility in recent months amid the pandemic, and this week's comeback is by no means an indication that the economy is out of the woods.

"I do think a full recovery must await a vaccine, but the stock market will respond to the expectations of one. That implies a lot of volatility," Brookings Institution Senior Fellow Barry Bosworth told Xinhua.

"Investors do not realize how bad the earnings reports in the second quarter will be, and they are too optimistic about a full V-shaped recovery," Bosworth said.

"I expect to see a rebound of the virus in the U.S., but leaders and the public will largely ignore it and move on with reopening of the economy. The economic pressures will exceed the fear of the virus. We expect strong growth for the remainder of the year, but far short of a recovery to beginning-of-year levels," he said.

Desmond Lachman, a resident fellow at the American Enterprise Institute, told Xinhua that the market has "got ahead of itself in thinking that we would have a sharp V-shaped economic recovery."

"The coronavirus pandemic is far from under control. Worldwide the numbers are increasing at the fastest rate yet recorded ... and 21 U.S. States are now seeing increased numbers," Lachman said.

"The premature lifting of lockdowns and the global trend towards large political demonstrations at which social distancing is not observed heightens the chances that we will see a second wave of the pandemic later this year both in the U.S. and abroad," he said.

"If that turns out to be the case, the U.S. and global stock markets will be in for some rough sledding for the remainder of this year," Lachman added. Enditem