NEW YORK (Reuters) – Some investors are wary about buying into a recent stock market rally. Even with hopes for a quick reopening of the economy, they want more evidence that the United States will not restart, only to have to fall back under another coronavirus lockdown soon.

FILE PHOTO: A trader wears a mask as he works on the floor of the New York Stock Exchange (NYSE) as the building prepares to close indefinitely due to the coronavirus disease (COVID-19) outbreak in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson/File Photo

The benchmark S&P 500 is up more than 25% from its March lows thanks to a combination of extraordinary intervention in the bond market by the Federal Reserve, a $2.3 trillion stimulus package passed by Congress and signs that the rate of infection in hot spots such as New York City is slowing. Those developments have led some analysts and investors to anticipate a reopening and forecast that the market has seen the worst of the selling.

However, other investors say that they will not believe that the U.S. economy can safely reopen until there are more medical reassurances put in place, ranging from widespread testing for the virus itself to the rollout of antibody tests that can show if a person is no longer at risk for infection.

Testing in many parts of the United States remains far behind other industrialized nations in coronavirus tracking, beset with long wait times and poor availability.

“The market seems to be pricing in a light switch reopening in May or June, and it’s more likely to be a slow, staggered reopening that will cause more economic damage the longer the shutdown lasts,” said David Lafferty, chief market strategist at Natixis Investment Managers.

John Briggs, Head of Strategy, Americas, at NatWest Markets, and other analysts said in a research note that “testing is everything” but cautioned that “compared to other developed nations, the U.S. testing rate is, so far, terrible.”

“I do not think you can open the economy without more testing, and, if the U.S. tried to, it risks a double hit from the virus,” NatWest said.

President Donald Trump said on Tuesday he is close to completing a plan to end the shutdown with some parts of the country likely to be ready to go before a May 1 target date. However, New York Governor Andrew Cuomo said he would not abide by any order to reopen his state in an unsafe manner. [L2N2C22R0]

Barry James, president of the James Advantage Funds, said that he will not be confident that the U.S. economy can restart until there are signs that hard-hit European countries such as Italy, France and Spain have successfully reopened.

“They were several weeks ahead of us in dealing with the virus and they should be weeks ahead of us in the recovery,” he said.

Economic data points such as U.S. jobless claims or factory orders are “worthless to people other than the fact that it scares the heck out of us all,” he said.

James is preparing for the market to retest its March lows, and has been moving away from any travel-related stocks and increasing his positions in companies such as Kimberly-Clark Corp (KMB.N) that specializes in personal care products and Kroger Co (KR.N), which makes and processes food for sale in supermarkets.

A study by researchers at the Harvard School of Public Health published Tuesday said that the United States may need to continue social distancing measures until 2022 unless critical care treatment is increased substantially or a treatment or vaccine is developed.

Hercules Investments, an RIA/hedge fund based in Los Angeles, California, with about $200 million under management said the assumption of an “unobstructed return to normalcy” is “fallacious reasoning.”

Still, there are fund managers who remain bullish about the U.S. getting back on track. George Young, portfolio manager of the Villere Balanced Fund, said that he has been buying shares of trucking company J B Hunt Transport Services Inc (JBHT.O) and medical technology company Stryker Corp (SYK.N) in anticipation of a resumption of the economy.

“This isn’t 2008 and 2009, when people were scared of losing their homes,” he said .”There’s still a lot of capital out there that wants to be deployed.”

Reporting by David Randall; Additional reporting by April Joyner; Editing by Megan Davies and Aurora Ellis

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