Will the S&P 500 and Dow Jones Rally Continue?
S&P 500 and the Dow Jones indices posted higher gains last week following clearer paths in the political and legislative path after Democratic wins in Georgia. Although politics will still dominate headlines as more leaders call on President Trump to step down, at the same time when tech companies are throttling Trump's communication channels, hopes of higher stimulus checks, a firmer economy, a more streamlined Coronavirus vaccine distribution, and relatively calm political waters will most probably combine to boost US companies and indices.
The US economy, for the first time in eight months, shed jobs, the NFP report on Friday showed. However, other metrics like average hourly earnings—a gauge of purchasing power- rose amid the fall. In contrast, the unemployment rate fell to 6.7 percent. However, it is the recent developments to speed up the distribution of the coronavirus vaccine that could help jumpstart the economy and companies--some of which have been adversely affected by mitigation measures like lockdowns.
Impact on US Indices:
Bullish. S&P 500 and the Dow Jones are likely to extend their gains thanks in part to Joe Biden's legislative control and, therefore, flexibility. The rising bond yields and a recovering economy could also attract capital to US debt instruments, providing funds necessary for distressed firms to dig themselves out of the financial hole they find themselves in.
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