The financial institutions of the world are analyzing the potentials of our investment markets for the summer of 2020. When using the American GDP as an example, we can determine that most economies were doing relatively well before the onset of COVID-19. The summer months of 2020 are expected to be hot and sunny, but the stock market of the USA might run cold and into darkness. All we can confirm about a stock market that’s hit by COVID-19 is uncertainty.
By the first week of June, the stock market had clearly shown acute conditions of uncertainty. United States stocks endured a 30% drop as early as February of 2020. In addition to the price falls of the stock market in 2020’s pandemic, we saw prices rise in May when investors found headlines of a coronavirus vaccine being made. Here’s what uncertainty is bringing to the investment market:
Volatility is the result of drastic changes in prices, which can often embody an erratic and uncertain behavior. Even skilled investors can’t predict the stock market of 2020 if its value continues to suddenly rise and fall without reason.
Shorts and Sells
Retail traders, with big hopes of outwitting the market, maybe convinced that things will quickly go up, but veterans will invest cautiously. Cautious investments are bearish ones. You can expect institutions to hold a bearish outlook for summer.
The U.S. economy, according to Fed Chairman Jerome Powell, is still strong, but the break it took during COVID-19 requires it to heal. Businesses are expected to rebound but don’t expect their market recovery to be swift. Think of summer as when the U.S. economy can recuperate in preparation for fall then winter.
The uncertainty of retail traders will not only deplete their funds via their erratic errors, but uncertainty will also discourage them from investing at all. Banks and Wall Street institutions have been working to “uptick” the market, but this might not be enough to get others interested in trading this summer.
Despite the fears that come from economic uncertainty, the summer can be a promising time in stock trading for 2020. What traders must do is look for long-term stocks if they want to weather the challenges of a post-COVID-19 market.