CNBC/Jeff Cox

Most investors don’t think this rally is for real, according to widely followed Wall Street survey

“More than two-thirds of professional investors doubt that the stock market jump off the March lows is the start of a legitimate new bull market, according to the Bank of America Fund Manager Survey for May.

Amid a surge that has seen the S&P 500 rise 32% since the March 23 trough, some 68% of survey respondents called the move a “bear market rally.” The term implies that even though the surge tops the 20% benchmark that would signal a new bull market, the fundamentals tell a more pessimistic story. The Bank of America poll is among the most widely followed surveys of investors on Wall Street.

That said, respondents still see the near-term “pain trade,” or the one that catches most investors off guard, as the market going higher. Current sentiment is consistent with an S&P 500 level of 3,020, or about 2.3% higher than Monday’s close, according to Michael Hartnett, chief investment strategist at Bank of America Global Research.”

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Gold edges higher a day after decline induced by coronavirus vaccine hope

gold coins and gold bars“Although reports indicate that pharmaceutical company Moderna Inc. MRNA, +19.95% has made some early progress toward a vaccine for the virus, some gold bulls say that the outsize fiscal and monetary stimulus measures enacted by governments across the globe will support gold buying over the long term.

“For long-term gold positions, a vaccine may not be an absolute game-changer as central bank balance sheets will not miraculously evaporate, and political/trade tensions between China and the US are unlikely to de-escalate,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a daily research note.”

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REUTERS/Brijesh Patel

Gold edges higher as global recession fears persist

gold and silver coins“Spot gold was up 0.2% at $1,734.66 per ounce by 0944 GMT. U.S. gold futures rose 0.1% to $1,736.60. On Monday, gold had slipped from a multi-year peak after drugmaker Moderna said its COVID-19 experimental vaccine showed promising results in an early-stage trial, lifting U.S. stocks and oil prices.

The pandemic, which has battered global growth, has prompted nations to roll out massive stimulus measures to limit economic damage caused by the virus. Gold tends to benefit from widespread stimulus from central banks because it is widely viewed as a hedge against inflation and currency debasement.

“Right now, market is focused on the aftermath of the big rally in stock markets yesterday that has taken some of the bid out of gold, but the underlying demand has not gone away,” Saxo Bank analyst Ole Hansen said. “We are looking at weaker economic outlook, massive amount of central bank measures in market and also have the tensions on the geopolitical front which should keep gold prices higher.””

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Gold Continues To Outperform S&P 500

gold bars and hundred dollar bills“A week that was decidedly risk off, with the prior week’s gains erased after multiple poor economic numbers hit the tape. Not to mention, escalating tensions with the U.S. and China after Federal Reserve Chairman Jerome Powell voiced the need for much more stimulus to prevent a depression. So in all, it is not surprising to see mainly outflows from equity funds, while bond and gold funds benefited. There was one bright spot, as tech continues to be the major winner from the pandemic as more businesses are forced to work-from-anywhere and utilize more bandwidth than before. For the week, the S&P 500 lost over 2%, while gold gained over 2%.”

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