Stocks leap for second session as investors watch coronavirus cases

Commerce Street Capital CEO & President Dory Wiley joins Yahoo Finance’s Seana Smith to break down the latest coronavirus news and how the pandemic is impacting the market.

Video Transcript

SEANA SMITH: Welcome back Yahoo Finance Live. I'm Seana Smith. We have stocks rallying for a second day in a row. The Dow is now up well over 400 points, up just around 2% so far this afternoon. So well off its highs of the day but the optimism here on Wall Street continues as investors grow more optimistic about a decline in new coronavirus cases. Now, the NASDAQ aiming for its first back-to-back gain since the beginning of March. As it stands right now, we have the NASDAQ up just around 1%. Now, all 11 S&P sectors are posting gains so far this afternoon, led by gains in energy and materials. Those two sectors are the top performers so far today.

For more on the rally, I want to bring in Dory Wiley, president and CEO of Commerce Street Capital. And Dory, thanks for taking the time this afternoon. Let's start with the rally that we're seeing in the markets. Like I said, the NASDAQ aiming for its first back-to-back gains since March 2. What do you make of the recent gains, and do you think we've seen a little bit of a turning of the tide in the markets recently?

DORY WILEY: Well, it could be. It's certainly been a great rally the last two days. I've been saying for the last two weeks, the market really didn't care as much about economic data as it wanted to get a hold of this virus and get some good data out of it. And the market seems to be feeling, you know, hey, maybe the worst of this is over.

But one thing's for sure, you know, when Dr. Moynihan came out as the congressional doctor and said, you know, 150 million Americans, maybe 2% to 4% fatality rate at 3 to 6 million people, that looks pretty far-fetched now, but that's what the market had to absorb in mid-March. And I think we've got a lot tighter range or something to deal with now.

Now the market wants to get a hold of what does that data really mean? You know, what is the average age of these people that are passing away? What kind of preexisting conditions do they have? What was life expectancy without the virus? Is the market can-- because every trader I talked to and person in the market is wanting to know the answer to those three questions. And if the market can get a handle around this, then it can start to digest the economic damage that was left.

SEANA SMITH: Well, Dory, going off of that, it was interesting, JP Morgan was out with a relatively bullish call this morning in one of their notes, and they were saying that the economy could open much sooner than initially thought. And they were going off of some of the things that you were just saying there, just in terms of the rate that we're seeing new cases, and it seems to be plateauing a little bit earlier in than maybe we had initially expected. And I know it's hard to guesstimate at this time, but when do you expect the economy to-- or us to start to see-- seeing the economy begin to recover?

DORY WILEY: Sure. Once we can digest those three items, then we've got one more item to digest, which is how long do we have to do this social distancing? How long does it keep us out of hospitality and travel and consumer spending and restaurants? And if we can get that-- a handle on what that frame is, because right now, we still don't know because we could have, you know, follow-up flare-ups, if you will.

Then we can get a handle on it, and I think the market can recover. Hopefully that's in two to three months. But the way the markets go in the last two days, it may be getting ahead of itself a little bit because we don't have the answers to those questions.

SEANA SMITH: Dory, what are you expect to see, just in terms of earnings? And I know that's a tough question right now. We had a Yahoo Finance piece out today and was talking about the lack of consensus right now because businesses are basically flying blind as it is at this stage, and analysts are admitting that they can only make a guesstimates at this point. But when we're trying to incorporate what we would likely see, how that will play into the markets, moves in the short-term, how are you reading that at this point?

DORY WILEY: Sure, earnings are going to be left. How's that?

SEANA SMITH: That's a safe call to make at this point.

DORY WILEY: Safe call, what a genius I am. So, you know, we focus very heavily on the banking sector here. So you know, a lot of analysts are forecasting losses and banks, and you still see a forward earnings price of five to six times.

In my mind, I'm assuming, hey, I can buy a lot of these banks below tangible book value. They're trophy banks. They could wipe out all their net income for the next two years, and that would be assuming losses four, five, and six times what the analysts are assuming, and it would still be a good bargain. So I think there's some really good bargains in here that provide for a lot of downside, at least in the banking sector.

SEANA SMITH: All right, Dory Wiley, Commerce Street Capital CEO and president. Thanks so much for taking the time this afternoon.

DORY WILEY: Thank you. Nice to be here.