Nixse
0

The stock market soared on Tuesday. What caused the rally?

Stocks surged forward on Tuesday as investors returned from a long holiday weekend in the United States. They considered the signs of mounting support for big fiscal stimulus out of Washington.

Thanks to the improved sentiment on the market, three major U.S. indexes rallied. The Nasdaq Composite outperformed, increasing by more than 1%. Furthermore, bank stocks traded mostly higher after Dow-component Goldman Sachs released fourth-quarter results. According to data, the numbers significantly exceeded analysts’ expectations, even though Bank of America’s quarterly report disappointed investors.

The Senate Finance Committee held a hearing on Tuesday, discussing President-elect Joe Biden’s nomination of Janet Yellen for Treasury Secretary. It was one of the most closely watched Cabinet confirmation hearings of the week. Yellen advocated for major fiscal action, arguing that it would help support the virus-stricken economy. She told Congress to act big when it came to more coronavirus crisis aid. Yellen also had a wide-ranging dialogue with lawmakers, announcing that she would support the Biden administration’s goals of tackling climate issues, as well as addressing illegal and unfair practices out of China.

Over the past couple weeks, prospects of additional fiscal stimulus have boosted shares. Besides, Federal Reserve officials seem committed to keeping monetary policy easy during the coronavirus pandemic period. As a result, interest rates are more anchored. Despite that, some traders are concerned due to the recent increase in the benchmark 10-year yield along with still-rising stock prices.

 What do the analysts think?

Capital Economics economist Neil Shearing stated that the sharp increase in the price of some risky assets had become the focal point of stock market concerns over the past couple of weeks. However, the valuations of lots of assets look justifiable in the context of ultra-low real interest rates thus far. According to Shearing, the question is whether real interest rates will remain at their current rock-bottom levels or not. He thinks they will, adding that even if he is wrong, the implications for riskier assets would depend in part on why they increase.

Investors will likely turn their attention to the first actions of the incoming Biden administration later this week as Inauguration Day takes place on Wednesday. Biden is set to sign about a dozen executive actions on the same day. He will address the pandemic and suffering economy, as well as climate change and racial equity. He also plans to rejoin the Paris Agreement, extend a pause on student loan payments and interest on federal loans, and issue a mask mandate on interstate travel and federal property.

  • Support
  • Platform
  • Spread
  • Trading Instrument
Comments Rating 0 (0 reviews)


You might also like

Leave a Reply

User Review
  • Support
    Sending
  • Platform
    Sending
  • Spread
    Sending
  • Trading Instrument
    Sending