Indices slowing down ahead of Joe Biden's Inauguration
A concoction of more than expected initial jobless claims, a flare-up in coronavirus infection loads, Wall Street banks' earnings reports falling short, and Joe Biden announcing plans of a $1.9 trillion package was enough to prop indices last week. However, the recent contraction might end up being short-lived even if market sentiment changed, and investors lock in profits. Technically, as long as the indices trend above key levels, there might be room for bulls to capitalize on market optimism, locking in even more profits.
Confidence is high that the US is turning after last year's free-fall. Still, indices gains may remain tapered until after Joe Biden takes the driving seat. The $1.9 trillion spending package and the FED re-affirming that interest rates will remain low now support indices, attracting demand for USD, while concurrently causing bond yields to rise. Nonetheless, indices rally is largely pinned on how best the coronavirus pandemic is handled. This has directly affected the labor markets and determines whether investors will loosen their purses on risk aversion.
Impact on Major Indices:
Bullish. The S&P 500 and the DOW may shake off last week's below-par earnings from Wall Street banks to inch higher above key technical trend lines after Joe Biden is inaugurated.
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