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Line chart of S&P 500 index showing US stocks stuck under starting point of the year after Covid crash

Global stocks have had a remarkable recovery since the coronavirus crisis pushed them to three-year lows in late March, but the S&P 500 index — Wall Street’s benchmark — remains stuck just below where it started the year.

Nerves over the US earnings season, the coronavirus pandemic and November’s presidential election are all acting as a cap on the market, analysts say.

Investors are expecting a spate of poor half-year results, given the impact of the pandemic, and uncertainty is unusually pronounced as many companies have not provided guidance on profits for the full year. Some are also worried by the prospect of higher taxes under a Joe Biden presidency as support for the Democrat surges and the latest opinion polls point to victory.

Meanwhile, companies are contending with a rising number of coronavirus cases in the US, which has prompted some regions to reimpose lockdowns.

The S&P 500 climbed back to its 2020 starting point in early June, popping above 3,230, and has hovered a little below that in the intervening weeks. But momentum has flagged since the vigorous rebound of April and May, and the index has failed to push any higher. Its 44 per cent rally since March still leaves it narrowly short of its early-January mark.

“The market is still not sure about the sustainability of the recovery, and the risk of a second wave [of the virus] is very much alive still . . . which is keeping sentiment extremely weak and cautious,” said Emmanuel Cau, head of European equity strategy at Barclays.

Investors no longer believe markets are about to collapse, as they did in March, but they have not yet expressed the view that the economic recovery has begun, said Florian Ielpo, head of macroeconomic research at asset manager Unigestion.

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