While case numbers are spiking, forcing several U.S. states to roll back or stall their reopening plans, the U.S. stock market just finished its best quarter in more than two decades, continuing what many think of as a growing disconnect between financial markets and economic reality.
Fueled by the largest stimulus package in history, (temporarily) receding case numbers, vaccine hopes and seemingly unshakeable optimism with respect to a swift recovery, the Dow Jones, S&P 500 and Nasdaq all rallied through large parts of the past three months, ending the quarter up 17.77, 19.95 and 30.63 percent, respectively. While those are the biggest quarterly gains in more than two decades for each of the three indices, many experts are wary of what鈥檚 next for stock markets.
鈥淎s we begin Q3, only one of those tailwinds is currently in place: stimulus,鈥 Tom Essaye, analyst and founder of wrote in a research note quoted by . 鈥淭hat doesn鈥檛 mean we鈥檒l see a correction, but be suspect of market rallies until we can add more forces supporting stocks, because we鈥檙e one stimulus disappointment away from an ugly day,鈥 Essaye warns with respect to the weak foundation of the latest rally.
