After finishing the first half of 2020 on a high, bulls have charged into the remaining six months on promising news of a vaccine and data showing 4.8 million U.S. jobs created in June, after 2.7 million in May.
European and Chinese data also suggest a recovery is under way, and investors hope third quarter economic data will reinforce that. The upcoming results season may offer proof of earnings bottoming out.
Several hurdles loom. The months leading up to the U.S. presidential election in November will be choppy, especially if Democrat Joe Biden extends his poll lead. The EU needs to agree on a $750 billion recovery fund proposal. And will the U.S. Congress extend a scheme supplementing jobless benefits beyond July 31?
Investors also worry about authorities getting cold feet as debt levels mount. No sign of that yet, but their track record of premature policy tightening post-2008 makes investors nervous. Any sign of policymakers tapping on the stimulus brakes too soon will spell trouble.