According to the results of trading on Friday, stock indices added significant values to the base pricings. The high-tech NASDAQ 100 was among the leaders, jumping up by 2.26% where both the S&P 500 broad market indices and the industrial DOW 30 also tried to keep up with their counterparts and added 1.60% and 1.34%, respectively.
What stands behind such move?
I believe that Nancy Pelosi’s statement played a big part. She said that the Democratic wing in Congress is developing an alternative $2.4 trillion program to help US businesses and Americans themselves. This amount is noticeably higher than the $800 billion proposed by D. Trump earlier this summer. Pelosi also said that the aid program would be presented to Congress this week. This news gave investors hope and caused a local reversal in the US stock market and served as an example for other stock markets.
Many market participants considered that the noticeable correction of the stock market that began in early September is already sufficient. The possible approval of an assistance program from the Democrats will become a catalyst for buying company shares.
Also, investors drew attention to the fact that the COVID-19 vaccine development is still in progress and we can expect some public results soon. I want to remind you that the COVID-19 pandemic plunged the American and world economy into a deep recession and such a short values movement as now are actually positive and deserve to be mentioned. The production of a vaccine will fundamentally change the balance of power in the financial markets, which will serve as the basis for a downward reversal of the US dollar and a strong growth in demand for risky assets after the September’s correction.
What to expect soon
Investors will continue to buy company shares cautiously following the economic statistics released later this week in the United States.
Most important will be the data on employment and production indicators, coupled with GDP’s forecast value. COVID-19 vaccine shiuld potentially drive a huge amount of confidence towards the US and the Global economy strengthen, what I personally expect by myself.