Major indices slump; Inflation Fears mount Derailing Bulls
On Monday, the stock market was mixed. Fears of higher inflation, rising bond yields, and a relatively weak labor market forced major indices marginally lower. The S&P 500, for instance, pared losses intra-day. Nonetheless, it remains on track to add more, albeit the unsustainable debt levels. Meanwhile, the DOW also recovered slightly, turning slightly bullish but NASDAQ fell weighted negatively by underperforming tech stocks.
Analysts remain confident as the last week of February opens on a complicated note. Despite fears of the economy heating up faster than expected, faster economic recovery prospects inject more momentum into stocks. Perfect signals cementing this overview stems from the rebounding of equity inflow in the last few months. For instance, the rebalancing and rotating funds back to the stock market points to investors in risk-off. As the U.S. thaws and the weather improve, there will be more inoculations as Biden plans to administer 100 million vaccines within the first three months in office.
Impact on Indices:
Bullish. Fears of higher inflation due to higher stimulus packages are overblown, according to some FED officials. Suppose inflation underwhelms and the economy recovers at a faster rate, the S&P 500 and DOW could rally.
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