Optimistic Markets
What is Keeping Markets Afloat?
Nasdaq Hits New All Time High, and Stocks Continue to Recover With No End in Sight.
https://investinghaven.com/markets-stocks/stock-market-forecast-predicts-bull-market-2020/
Stocks increased gains this week yet again after a devastating start to the year. The highly liquid S&P 500 ETF known as SPY plummeted to a low of 217.75 in March after a previous high of 339.38. As markets continue to recover with SPY now at 319.34 as of market close on Friday, June 5 2020, many investors are left confused once again.
Something is keeping U.S. Markets afloat, and it is not the economy, as second quarter GDP is expected to fall by almost 53%. Many Wall Street aficionados point to nothing but sheer optimism for rising stock prices, but a multitude of events are responsible.
Fear
The first reason is fear. A good way to “measure” fear that investors possess is to analyze the CBOE Market Volatility Index (24.52, VIX). More unease experienced by investors means more bullish movement from the VIX. The 52 week high for the VIX on March 18, 2020, was 85.47. Now, as of market close on June 5, 2020, the VIX sits at 24.52. This data along with the diminishing number of Covid-19 cases, shows that people including investors are much less anxious about the outcome of this monstrosity. Due to this, investors are more comfortable putting their money into the market, which drives up prices.
Vaccine and Treatment Outlook
The ever increasing hope of the eradication of Covid-19 continues to grow. With companies such as Novavax (46.30, NVAX) and Gilead Sciences (76.75, GILD) amongst others moving forward with the research of medicines and vaccines, the American people feel more comfortable about the fate of this country regarding the Coronavirus.
The Fed
The Federal Reserve, more commonly known as The Fed, has pumped trillions of dollars into the American Economy to help prop it up. (At the beginning of 2020, the Fed had approximately 4.15 trillion dollars worth of assets. Now, the Fed’s assets are valued at over 7.15 trillion dollars.) Small businesses, families, and other companies have received anywhere from hundreds to millions of dollars, from various multi billion and trillion dollar stimulus packages, providing improvement to a grim economic outlook. The Fed used some of this money to purchase stocks to inflate markets, helping the economy once again in the short term. Other Fed dollars were used to bailout airlines, as they were and are receiving little to no business due to global air travel restrictions and precautions. All of this action creates an optimistic outlook for investors, and makes them more confident, thus boosting the stock market.
Economic Activity
As of only weeks ago, the U.S. was hit with the good (some say bad) news of the economy being able to reopen. This means that your local haircutters and local bakery can open for business once again. With millions of businesses being able to obtain funds, the economy began to move once again. As money flows in, after a short shutdown, a lesser pessimistic outlook is developed. Furthermore, the May jobs report brought the biggest increase of jobs in history, leading to an only greater optimistic viewpoint.
Technology
The final reason is the tech sector. The Dow Jones’ all time high on February 12, 2020, was 29,568.57 points, and its most recent high as of Friday, June 5 2020, was 27,320.03 points, a net change of -2,248.54 points or -7.60%. The S&P 500s’ all time high on February 19, 2020, was 3,393.52 points, and its most recent high as of Friday, June 5 2020, was 3,209.43 points, a net change of -184.09 points or -5.40%. The Nasdaqs’ all time high on February 19, 2020, was 9,838.37 points, and its most recent high on Friday, June 5, 2020 was 9,845.69 points, a net change of +7.32 points or .07%. As can be seen by this data, the Nasdaq is the only index that has a positive return from its previous all time high. This is because stocks such as Apple (331.50, AAPL), Tesla (885.66, TSLA), Amazon (2,483.00, AMZN), and Zoom (207.60, ZM) have done extraordinarily well given the current state of the world. Specifically Amazon and Apple take up a large portion of the stock market, so bullish price action from both of these stocks alone have the power to influence the entire market itself.
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First off, Sioux, thank you for joining. I’m glad that you enjoy this publication, and I appreciate your being involved. As you can imagine, it is going to take me some time to get back to you on your questions, and it is currently late where I’m at, but I will try to get back to you with some responses as soon as I can.
I was stock checking Baidu also, would it be delisted or just expected by US govt to show its income statements ie; (to be audited in USA if the bill is past )
do you see that its keeping ahead of its competitors with revenue stream vs expenditure liabilities court-cases if any? I see it earns income from advertising and queried if it was still like the "google " to european-USA Australasia web searches
Do you think its a good buy Josh,
Being stocks were seen as an option, however that would have to be held for a decade I would say.
Whats your take on Elton Musks lauch to the space shuttle are you aware if Boeing was among the main components of the shuttle ? It was I think a New Zeland comany not publiclally on stock marker who provided the "lift off power "
catch you later when you have time to write.
S