Stock Market Third Quarter Forecast: Covid Concerns & Fed Policy to Clash

Stock Market Third Quarter Forecast:

• The Nasdaq has stood at the forefront of risk appetite in the wake of covid and may continue to do so
• Accommodative Fed policy and rising covid cases will clash for control of market sentiment
• All the while, a looming presidential election will serve to create uncertainty and volatility

Stock Market Third Quarter Forecast: Covid Concerns & Fed Policy to Clash

Equity markets enjoyed a remarkable recovery in the second quarter, recouping much of the ground they lost in the initial coronavirus crash. As the third quarter begins, many of the same themes that dominated stock market price action over the last three months look poised to continue their reign for the time being. Therefore, market sentiment and, in turn, stock prices will continue to monitor coronavirus cases, lockdown procedures and the resultant policy adaptations from the Federal Reserve.

Nasdaq 100 Price Chart: 4 – Hour Time Frame (February – July)

With the Nasdaq 100 at the forefront of risk appetite throughout the second quarter, there is little to suggest the tech-heavy index will not continue to lead the way, particularly with many of the same themes at hand. In addition to coronavirus and the Fed’s monetary policy path, a looming presidential election will serve to create further uncertainty that the Nasdaq 100, Dow Jones and S&P 500 will have to grapple with. Read the full third quarter equity forecast through the banner below.

--Written by Peter Hanks, Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX