What Next?

It has been the best of times and the worst of times for U.S. equity benchmarks over the past two quarters, and that is, perhaps, why Wall Street analysts are facing their most befuddling challenge yet.
 

The Dow Jones Industrial Average and the S&P 500 just put in their best quarterly performances since 1938 in the aftermath of a bruising pandemic that took hold in March, according to Dow Jones Market Data. That performance would be stellar if it weren’t for a few simple facts: The Dow booked its worst first six months of a calendar year since the 2008 financial crisis, while the S&P 500 notched its worst first half of the year in a decade.
 

In other words, the returns enjoyed this quarter came after a troubling quarter that was ushered in by the emergence of the COVID-19 epidemic in the U.S. and its subsequent punishing effect on the economy, with businesses compelled into hibernations to curtail the spread of the deadly infection.
 
 Since hitting a March 23 low at 2,237.40, the S&P 500 has surged 38% to nearly 3,100, while the Dow has climbed 38.5% and the Nasdaq Composite Index has rallied about 46%.

The problem is that there’s no clear consensus on where the market goes from this point, and strategists have been more inclined to raise their year-end outlooks for the S&P 500 rather than lower them, even as the markets have run briskly higher past their targets and as coronavirus cases have staged a resurgence in parts of the U.S.