FXStreet reports that investors are increasingly taking their cues from the macro data and as the economic  figures are improving, the S&P 500 rally, which trades 37.1% higher from the March 23 bottom, makes more sense. Economists at JP Morgan believe a pullback will be triggered by a second wave of coronavirus or a obliteration of policy support but this is unlikely to happen in the short-term. 

“Investors seem focused on three things: the rate of COVID-19 case growth, the policy response and the potential for a strong rebound in corporate profits over the coming 18 months. When viewed through this lens, the equity rally that we have seen begins to make a bit more sense.”

“The data is getting better, policy on all fronts is accommodative and case growth remains under control. While a second wave of infection or removal of policy supports would cause markets to pull back, it is unclear whether either of those will materialize in the near-term. As such, we remain focused on the ability of the economic data to continue surprising to the upside, and would expect that as things cool off in the coming months, markets will begin to focus on the challenges facing the economy going forward. While we do not think this would precipitate a re-test of the March lows, we do believe that volatility will persist through year-end.”