Stocks are rallying today as continued optimism boosts investor sentiments about the reopening of the economy.

As every investor knows by now, the current, second quarter of the year will have some of the worst economic data the United States has ever seen. A lot of that bad news is already priced in. Case in point: the stock market barely reacts to the dire labor market reports, either the weekly jobless claims or monthly jobs reports.

But therein lies a conundrum, said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research on a media call today.

I don’t think we’ve thought enough about the ripple effects and second order effects,” Sonders said. “I think at this point, given the rally in the stock market, they’re not being discounted.”

Take the labor market, for example, where most of the millions of coronavirus-related job losses are considered to be temporary. The increasing number bankruptcies could mean those layoffs might become permanent, Sonders said. In this month alone, retailers JCPenney, Neiman Marcus and JCrew have filed for bankruptcy.

Another fallout would be if colleges continue to teach online rather than in person come fall, Sonders said, which could create difficulties for the local economies of college towns.

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