‘We’ve seen the lows in March and we will never see those lows again’
That is Jeremy Siegel, professor of finance at the University of Pennsylvania’s Wharton School of Business, during CNBC’s “Squawk Box” segment on Friday, expressing nearly unfettered optimism about the path forward for the U.S. stock market, despite a historically bad jobs report.
Friday’s monthly report on the employment situation in the U.S. showed that 20.5 million jobs were eliminated last month, and the unemployment rate rocketed to 14.7% from a 50-year low of 3.5% two months ago, as the coronavirus pandemic shut down businesses across the country. However, dramatic as it was, the headline number was less alarming than estimates calling for 22 million unemployed.
Although the government didn’t keep records back then, economic historians estimate unemployment peaked at 25% in 1933.
Still, according to Siegel, unprecedented support for the economy by the Federal Reserve and the U.S. government make it nearly impossible for the stock market to revert to its late March lows.
The Dow Jones Industrial Average
is up about 30% from its March 23 low at 18.591.93, while the S&P 500
is up by about the same amount from its low at 2,237.40, and the Nasdaq Composite Index
has climbed by 32.5% from its bear-market nadir at 6,850.67, according to FactSet data.
In fact, the Wharton professor envisions equity markets rising well into 2021 as treatments and vaccines for the COVID-19 disease are discovered. “I think 2021 could be a boom year,” he told the business channel. “With the liquidity that the Fed is adding — unprecedented — it could be a really good year.”
Siegel garnered acclaim after he forecast that the Dow would reach 20,000 at the end of 2015. The index ended that year at 17,425.