In 2008, markets rose in anticipation of the bailout bill and began to fall rapidly almost immediately afterward. This is a good example of how monetary and fiscal policy cannot be relied upon to prevent major stock market declines.
A short rally could certainly take place, but the point is that the Fed/Congress cannot "fix" the stock market. An unprecedented economic collapse has taken place, and markets must inevitably fall to account for this.
All that monetary/fiscal policy can do is reduce the severity of the downturn, and pave the way for a strong recovery. Without the liquidity of the fed, we would already have seen a cascade of bankruptcies and a financial crisis.
In short, the stimulus will NOT lead to a quick recovery of the stock market. At best, it will prevent a complete collapse of asset prices going forwards.
A short rally could certainly take place, but the point is that the Fed/Congress cannot "fix" the stock market. An unprecedented economic collapse has taken place, and markets must inevitably fall to account for this.
All that monetary/fiscal policy can do is reduce the severity of the downturn, and pave the way for a strong recovery. Without the liquidity of the fed, we would already have seen a cascade of bankruptcies and a financial crisis.
In short, the stimulus will NOT lead to a quick recovery of the stock market. At best, it will prevent a complete collapse of asset prices going forwards.