NEW YORK — An expected record unemployment rate had stock market investors on pins and needles, wondering if a plummet would accompany Thursday’s report.
That report showed 3.3 million unemployed Americans, nearly five times the previous record.
But instead of a market nosedive, a 6% surge occurred, which surprised many investors and experts, alike.
“I would have been happy if it were slightly positive. One to two percent,” said Scott Mabee, Vice President of Baird Financial in Peoria.
“Passing the [$2.2 trillion] stimulus plan has people excited about the outlook knowing we’re going to get past this.
“When we have our leaders saying we will get past this, when people actually start to believe it, that’s what we’re starting to see.”
As mathematical as Wall Street can be, Mabee explained it’s also deeply rooted in the intangibles.
“When people are so pessimistic about the market and economy, that’s really when you want to buy, and extreme pessimism is what we’ve seen this past week, and that’s really when you can make your money,” he said.
Mabee advised to be cautiously optimistic as the coronavirus ordeal continues.
“If you look at the VIX [Volatility Index], that’s still up around 60, which is an historic high,” he explained.
“In any bear market, which almost everybody says we’re in now, there will be retesting of the lows, so we’re going to see it bouncing around. Hopefully this is a low point and we’re testing the bottoms, and once we flatten the curve, that’s when we can really see people start spending.
“When they lift all the restrictions we have, and people can get out and spend again, and go to restaurants and eat and be outside, that’s when we’ll see GDP [gross domestic product] numbers really start to take off the right way.”
For those looking to invest during the lean times, Mabee gave the auto industry as an example of an industry that will be able to weather the storm, expecting consumers will have “built-up demand” for product when the pandemic ends.
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