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Coronavirus vaccine is only thing that could keep bull market alive: veteran trader

Brian Sozzi
Editor-at-Large

The raging Wall Street bull would also like its coronavirus vaccine, and quickly.

“For traders, this is the unknown unknown. I think you definitely could see another shoe drop,” veteran trader Alan Valdes of Silverbear Capital said of the current market volatility on Yahoo Finance’s The First Trade. Valdes suggested traders would like to see a coronavirus vaccine before more aggressively moving back into stocks and taking a pause in driving up market volatility.

“That [a vaccine] could be a year and a half away. I don’t think we will have these crazy fluctuations for a year and a half, but this market is not really going to stabilize,” Valdes said. To Valdes’ point, only drumaker Gilead has shown strong progress on getting a coronavirus vaccine to market before the summer. The company’s remdesivir is currently in Phase 3 testing to treat coronavirus.

In the meantime, volatility in markets looks to be the name of the game for the foreseeable future. That’s despite the Federal Reserve’s 50 basis emergency rate cut earlier this week meant to tamp down coronavirus concerns on the Street. If anything, sources have told Yahoo Finance, the cut — and another 25 basis point cut when the Fed meets in two weeks — signal a U.S. economy that has felt a sharp growth slowdown.

(AP Photo/Richard Drew)

The S&P 500, Dow Jones Industrial Average and Nasdaq Composite were each off by more than 2% on Thursday, indicating equities would give back a big chunk of gains after Wednesday’s surge. A still-escalating coronavirus outbreak around the world continued to weigh heavily on the minds of investors.

“With sentiment, not macro variables, driving volatility and quants enhancing the move, expect volatile markets as this debate intensifies. Large virus clusters showing up in the U.S. would go a long way in settling the debate,” cautioned Evercore ISI strategist Dennis DeBusschere. “We lean bullish given the solid consumer backdrop, high implied volatility and aggressive easing, but an extended rally is unlikely until investors have comfort that a consumer retrenchment is unlikely.”

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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