Hedge fund manager Paul Tudor Jones thinks the market could be higher as soon as three months from now despite expectations for a turbulent April.
“I do think the stock market’s going to find a bottom once we get a peak in the epidemic curve, [there’s] not a doubt in my mind the stock market will rally,” he told CNBC.
“My guess is one of the reasons the market’s up right now is because of all the month-end rebalancing. The market’s front-running, it sees the fact that there are going to be a lot of equities to buy,” Jones told CNBC.
“That’s one reason my guess is we’ll stay firm into month-end and then we’ll be challenged in April,” as the market digests a peak level of coronavirus cases.
“I think that could bring us to a retest, I might even bring us to a fractional new low. But I do think the stock market’s going to find a bottom once we get a peak in the epidemic curve, [there’s] not a doubt in my mind the stock market will rally,” he continued. “My guess is we’ll be higher three or four months from now, five months from now, than lower there where we are right now.”
The billionaire also urged Americans not to panic or blow the illness out of proportion, saying the disease will eventually pass.
“We’ve got to be careful not to mythologize this particular disease,” he said. “We’ve got to be careful not to mythologize this into the pandemic Godzilla. We can beat this thing.”
Meanwhile, the Dow Jones Industrial Average is now up more than 20% from its intra-day low this week, technically establishing a bull market. But with the S&P 500 still down more than 20% - or about $6 trillion in value - from its mid-February record highs, traders said the rebound was unlikely to last without evidence that the virus was being contained.
"We're not out of the woods yet on the health or economic crisis," Eddie Perkin, chief equity investment officer at Eaton Vance in Boston told Reuters.
"It would seem odd to me if the markets fully stabilize before we get more clarity on the health front."
The United States on Thursday surpassed China as the country with the most number of coronavirus cases and is expected to become the epicenter of the pandemic. British Prime Minister Boris Johnson tested positive for the virus, he said on Friday.
A record 3 million surge in U.S. weekly jobless claims offered the first glimpse of the extent of the economic damage from the outbreak, which has forced several companies to shutter stores and announce layoffs.
"Big questions are starting to be answered, like how bad spread of infections (and) how bad is the economic damage," said Neil Wilson, chief market analyst for Markets.com in London.
"That is a recovery narrative, not panic, but if a recovery is not as swift as hoped, equity markets will suffer another hit."
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