Almost all asset classes finished Friday with a bold and exorbitant rally that put a bandage on an otherwise historically turbulent downward week for the markets. Markets were given optimism and hope amid the U.S. government, through a combination of legislative and executive action, unveiling and passing a variety of fiscal stimulus measures to support consumers and businesses. The series of announcements Friday afternoon also gave a clearer picture of a serious national plan to increase coronavirus testing, vaccine development, and containment.

While Friday's events are reason for celebration I believe we may have not seen the bottom yet of this rapidly developing market. The fact remains that coronavirus appears to still be spreading and now is beginning to hit not only the United States but many more major and minor economies around the world. Until we see serious progress in the virus being controlled and consumer and business activity starting to return to normality I think we may still be in for much more weekly or even daily volatility to come.

Markets Remain In Deep, Unstable Red

The Dow closed off the weak with a mild rally on Friday fading almost entirely by midday and then ripping forward in the afternoon power hour to close with the largest point gain in history at +1,985 and the 10th largest percentage in history at +9.36%. At now 23,185.62 the Dow still is about 21.5% down from its closing high of 29,551.42 barely a month ago on February 12.

The market's closing rebound on Friday was due seemingly to some of the first serious signs of political agreement and action in the United States to address coronavirus on a national scale. Many of these efforts may well soon pay off as increased testing becomes available, vaccines are beginning to be tested and rolled out, and a variety of fiscal stimulus measures prevent businesses and consumers from going under until the crisis has passed.

Yet normality remains far from clear. At the same time that Apple announced it was re-opening essentially all its China stores it announced it was temporarily closing all stores outside of China. Sporting event cancellations, school shutdowns, and government prohibitions on any kind of mass gathering are now spreading like wildfire across the United States and many other nations. It is clear that the fight against coronavirus has only begun, not concluded, and as with any struggle it is uncertain how long and painful it might be.

I described in an interview with investment media magazine Arvopaperi published on February 18, when the Dow was at a now almost unfathomable 29,232, that not only were equities generally overstretched but they had not even remotely priced in the supply chain and consumer/business activity disruptions from the possible spread of coronavirus. Equities, and really all other asset classes, now have and will continue to do so based on the daily progress being made in controlling and eradicating coronavirus and which means significant moves based upon if vaccines are working and if spreads slow and the number of infected reach an inflection point.

Furthermore we have not seen any actual posted business or economic numbers from all the fear surrounding coronavirus. So far all the market declines have been based on reduced guidance and the belief that everything from earnings to GDP numbers will see a cascade downwards. Once those numbers begin posting they may well have further volatile effect on the market as they are better or worse than initially expected and are final and actual.

Coronavirus Differs From Past Market Challenges

Unlike with other very turbulent recent sagas in the financial markets such as the 2008 financial crisis, the circa-2015 Eurozone debt crisis, and the trade wars of 2018-2019, the coronavirus is not human-made and therefore efforts to control and reduce it are not as simple as reducing rates, as the Federal Reserve may well do this upcoming week, or pumping some money into the economy.

The coronavirus spread is a fight with science and nature into uncharted territory - and with that means the market will continue to shake up and down until victory is in sight.