New Economy Stocks Are Driving the Markets, But This Won’t be a ‘V-Shaped Recovery,’ Says Nasdaq Chief Economist
The benchmark U.S. indices, such as the Nasdaq Composite, are reaching new records on a seemingly daily basis, as “new economy” stocks power the markets higher. However, Nasdaq Chief Economist Phil Mackintosh warns that the road to recovery likely won’t be V-shaped as companies continue to feel the pandemic’s impact with coronavirus cases surging across America.
“If you actually look across the spectrum at the market, not all the companies are going as well as a lot of the tech companies are,” Mackintosh said during a recent interview with Yahoo! Finance. “The difference between the performance is very much related to whether the companies have had to shut down completely, shut down 50%, or are doing really well out of being in a unique position to benefit from what coronavirus has brought to the economy.”
Mackintosh discussed the dynamic brought about by COVID-19, noting that while some biotech companies are working on a treatment, many people are still working from home, taking Zoom calls and even watching more Netflix – and those stocks are performing well as a result. Still, he acknowledged that the “big unknown” will be whether the pandemic changes the way we work forever or if a vaccine will bring about a return to normalcy.
“If you look at some of the old economy stocks, they’re not going to zero price, so a lot of people still have a lot of faith that we will come back to normal,” Mackintosh said. “But as we see the second wave coming through a lot of Asian countries right now, in Europe, and we see the extension of the cases in America, you’re starting to realize that it’s not going to be a V-shaped recovery. And it’s going to take a lot longer to get back to normal.”
According to Mackintosh, people’s behaviors change when there is a spike in coronavirus cases. Often, consumers reduce spending, which can trickle down to employment.
“What we need to do is either have a vaccine – that’s one thing that we’re obviously very focused on, is the progress of this third phase studies in the vaccine side – but also to learn to deal with COVID more successfully so that you can isolate cases quickly, quarantine smaller parts of the economy, and keep the rest of the economy going,” Mackintosh said.
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