Jeremy Siegel, a professor of finance at the University of Pennsylvania’s Wharton School of Business, on March 30 said that the worst may be over for the stock markets.
In an interview with CNBC, Siegel said that the stock market may have bottomed out last week and listed four steps to determine the staying power of this current run-up in stocks.
The US stock market logged some nifty gains on March 30 with the Dow Jones Industrial Average settling 690 points higher at 22,327 up 3.2 percent. The index has ended in the green in 3 out of the last four sessions but is still down over 12 percent in March.Siegel's 4 step guide to ensure bona fide stock-market recovery
The first step has already been achieved, the professor said.
US President Donald Trump on March 27 signed a $2.28 trillion stimulus package to aid businesses and workers threatened by the spread of COVID-19 that has killed over 3,000 and infected more than 1,60,000 people across the nation.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
Siegel feels a lot more needs to be done to achieve steps 2 and 4.
Speaking on reinstating economic normalcy, Siegel said that a lot of uncertainty in the stock market can be removed if a systematic action plan for reopenings portions of the economy comes into play. He added that the country also needs to ramp up testing to effectively contain the contagion.On Sunday, the Trump administration had extended social-distancing guidelines to April 30 from April 12, suggesting that POTUS may finally be taking the threat imposed by the novel coronavirus, which has claimed over 37,000 lives worldwide, seriously.