Unthinkable just two months ago, when the world economy closed in response to the coronavirus pandemic, the benchmark index for US stocks. The S&P 500 broke the psychologically important level of 3,000 on Tuesday, crowning a 37% rally in shares since its March low.

But the market may have discounted an economic recovery that the data so far does not support, and some participants say the rally has gone too far, too fast.

It has been fueled by extraordinary interventions by the Federal Reserve and other central banks, a $ 2 trillion stimulus approved by Congress, and the hope that the rapid development of a vaccine means that the worst of the damage from the global economic freeze has already past.

“People have been locked up and when they see glimpses of hope like vaccines, that drives optimism probably ahead of where it should be and clearly ahead of the economy,” said Richard Steinberg, chief market strategist at the Colony Group.

Analysts cautioned that they do not expect the market to continue its rapid upward trajectory.

“I think we are going to pay back a little money soon when more political headlines emerge and people start thinking about the problems with China, the problems in Europe, the problems everywhere the investor looks,” said George Gero, director General of RBC Wealth Management.

Deutsche Bank CEO Christian Sewing said Tuesday that the markets were overly optimistic.

“In my personal opinion, the underlying assumptions for this recovery are too optimistic,” he said. “Second and third order effects have not been fully assessed at this stage.”

The rebound in the market has occurred in a devastating economic context. The US economy It lost 20.5 million jobs in April, the most since the Great Depression.

“It is quite extraordinary,” said Michael Purves, CEO of Tallbacken Capital Advisors. “It is a ‘V’ market with an economic condition probably not ‘V’,” he said, referring to the shape of the possible recovery.

Any development that brings a vaccine closer to the market is likely to drive additional gains even if the economic data lags, said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“If things go well, we could have a vaccine at the beginning of the year,” Cardillo said. “It is a rally of hope.”

BULL OF BULLS

It’s being fueled in part by five giants – Amazon.com Inc, Microsoft Inc, Apple Inc, Facebook Inc, and Google-parent Alphabet Inc – which account for about 20% of the weight of the S&P 500 Index, pushing the broad market up to as investors group together in companies that have seen an increase in demand during the economic freeze.

Amazon, for example, is up nearly 45% from its March low, while Facebook is up 62%.

Some justify the gains by comparing the US economy with that of China, which is about two months ahead both in terms of the virus outbreak and recovery.

China’s composite purchasing managers index fell more than half in January, but in April it was above its earlier-year reading. The United States Composite PMI, meanwhile, began its sharp decline in February and recorded a nearly 35% increase in May, according to preliminary Markit figures.

“Perhaps the revival within the US It is not as fast or as dramatic as it has been reported in China, “said Jim Paulsen, head of investment strategy at the Leuthold Group. “But the economic pattern exhibited by the US economy so far is similar (with a delay) to the Chinese experience.”

Investors are looking for light at the end of the tunnel.

New York was long the epicenter of the US outbreak, but Governor Andrew Cuomo said Tuesday that Remembrance Day, which fell on Monday, would show that “we turned the page on COVID-19” and turned to focus on reopening.

In a sign of survival in the financial heart of the city, the New York Stock Exchange partially reopened its parquet. (Reporting by David Randall. Additional reporting by Medha Singh, Sinead Carew, Tom Sims, Hans Seidenstuecker and Patricia Uhlig. Edited by Megan Davies and Nick Zieminski) .. Translate serenitymarkets