Wall Street snapped back to life on Wednesday, recovering from its worst stretch of losses in months, as the bloodletting for big technology stocks came to at least a temporary halt. (Sept. 9)
SAM STOVALL: I think what we're seeing is really just sort of a reflex rally. The S&P 500 fell 7% in only three trading days, and I think that it just went too far too fast. So we're seeing a bit of short covering, in my opinion, reflex rally. But the real question is, what do the markets do on Thursday and Friday of this week?
I think they're too frothy and they will become a better buying opportunity. At the end of August, we-- if you look at the price differential between the S&P 500 Growth Index and Value Index, we were at the highest level in history, surpassing where we were when the tech bubble burst. So it's amazing how well growth had done relative to value, to the point that it was at a tremendous extreme and really, it was a correction looking for a catalyst.
What worries me is that we don't get a V-shaped recovery or it ends up looking a little like a square root sign, in that we went sharply lower in the first two quarters of 2020. We're expected to show a more than 30% jump in GDP in the third quarter and then expected to see a near 10% gain in the fourth quarter. So my concern is, what if we do end up having a sharper ramp-up in COVID-19 cases in the fall?