Catch your breath and stay hydrated, stock market investors. It’s only halftime, and the second half of 2020 could go either way.

During the first six months of the year, stocks experienced their biggest quarter-to-quarter swing in more than 80 years. First, the coronavirus pandemic and an unprecedented shutdown of the economy sent stocks on one of the fastest declines on record. Then, giant helpings of government stimulus not only stopped the sell-off but sent stocks charging to their best quarterly performance in more than two decades.

Where they go next is a mystery. There’s so much uncertainty about the coronavirus crisis that roughly 40 percent of the S&P 500, about 200 companies, have withdrawn their customary forecasts about how their businesses will perform in the months ahead, according to data from S&P Capital IQ.

The companies’ silence has unnerved analysts, who have already axed their expectations for profit growth substantially. They’re now expecting that second-quarter profits will fall more than 40 percent, according to numbers compiled by the data provider FactSet.

That’s an ugly forecast, but investors face a crucial question: Is it ugly enough?

“The numbers are sort of all over the place,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said of analysts’ predictions.

For much of the second quarter, which ended on Tuesday, fear of the unknown didn’t seem to matter. The S&P 500 rose nearly 20 percent in the best calendar quarter for the broad market index since 1998.

Stocks were up nearly 45 percent at one point after the S&P 500 bottomed on March 23, and the sizzling performance made the market appear out of step with the depth of the uncertainty facing the economy and American companies.

But there is nothing Wall Street hates more than uncertainty, and lately the rally has cooled and trading has gotten rockier as investors turn their gaze to the rest of the year. Although a few bounces were mixed in, stocks slid roughly 4 percent over the last three weeks.

“The market is now becoming rational,” said Solomon Tadesse, head of North American quant equity research at Société Générale in New York. “That’s why you see the volatility.”

Without the earnings guidance they’re accustomed to, analysts and investors will have to wait for the quarterly earnings reports — which will start to arrive in bulk in the middle of July — for any sort of hard data on how the pandemic is hitting the bottom lines of major corporations.

Expectations for corporate profits are heavily reliant on the outlook for the economy, which remains very much at the mercy of the outbreak. The virus has already sunk the United States into its worst recession since the Great Depression, with roughly 20 million Americans receiving unemployment benefits.

There have been promising signs: In May, numbers on everything from unemployment to manufacturing to retail sales showed sharp rebounds. Though they still showed the economy in a deep recession, those figures helped buttress hopes for a strong snapback in activity premised on rising hopes that the virus could be contained.

But that premise has crumbled over the past few weeks. Officials have reported sharp upticks in cases in many states, especially in areas of the South and West that were largely untouched when the virus first flared in the United States in March.

Those new outbreaks have prompted a number of states to pause — and some, like Texas and Florida, to roll back — efforts to normalize economic activity.

  • Updated June 30, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

Stock market optimists suggested that the rally was in many ways a reflection of investor expectations that the pandemic — which had peaked in early hot spots such as New York City in April and May — was beginning to abate, clearing a path to restart the upward march of share prices seen during the preceding bull market, which lasted more than a decade.

There’s another source of unease: what policymakers will do as the pandemic persists.

Some explain the surge in stocks largely as a result of the huge amount of fiscal and monetary stimulus the federal government threw at consumers and financial markets as the virus started to freeze up much of the economy.

The Federal Reserve months ago signaled its willingness to do pretty much anything necessary to keep markets functioning smoothly and provide support for the economy. The central bank pumped more than $2 trillion into the financial system, largely by buying government-backed bonds, but it has also started buying relatively small amounts of corporate bonds. Analysts remain confident that the Fed will continue providing such support for the foreseeable future.

But they’re less sure what to expect from Congress and the Trump administration.

In March, the $2 trillion CARES Act became the biggest economic rescue package the government has assembled in modern history. That legislation sent stimulus payments to more than 100 million Americans, distributed hundreds of billions in forgivable loans to help small businesses pay idled workers and increased unemployment payments to those who lost their jobs.

The depths of the crisis made it relatively easy for politicians from both parties to forge a deal that would keep the economy from disintegrating. But those programs have already started to expire — the Paycheck Protection Program is scheduled to take its last applications from small businesses on Tuesday.

Democratic and Republican lawmakers agree that more aid is necessary, but they have yet to find common ground on a number of issues. Republicans are reluctant to extend costly jobless benefits and have said increasing liability protections for businesses and schools is a priority. Democrats are calling for hundreds of billions of dollars in state and local aid and an extension of unemployment benefits.

Jonathan Golub, chief U.S. equity strategist at Credit Suisse, said investors appeared to be nearly certain that additional fiscal stimulus would be coming out of Congress, but that any significant delays could add to the market’s jitters.

“How they get extended is going to be extremely important,” he said.

Emily Cochrane contributed reporting.



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