The coronavirus pandemic paired with unprecedented government stimulus efforts to reverse the financial fallout changed the outlook dramatically.
Until very recently, stock-market investors mostly were looking past the chasm, sensing better business conditions six or nine months hence.
The worst of the earnings reports likely will come in the current quarter, but bad news could persist well into the second half of 2020, wrote Sheraz Mian, research director at Zacks Investment Research.His current expectation, based on Wall Street forecasts, is for a 24% drop in overall profits for companies in the Standard & Poor's 500 index this year, followed by a rise of nearly 27% in 2021.
Normally, incumbents stand a good chance of winning re-election, especially when the economy is faring well. But President Trump's outlook has dimmed with the virus outbreak and economic slump.A quick rebound would help Trump. But of the 10 states with the tightest presidential votes in 2016, nine currently have double-digit unemployment rates, a bad sign for the president, noted J.P. Morgan. The list includes Arizona, Michigan, Pennsylvania, Wisconsin, Florida, Nevada and North Carolina.
Bonds still have a place in investor portfolios, as they provide relative price stability with some income. But bond investments, at today's yields, aren't going to make anyone rich.And while not as volatile as stocks, bonds come with their own risks. One is the rising chance of default on bonds issued by corporations and some municipalities.
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