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A Surge In The Stock Market This Week
This week, the stock market had a good week, driven up by strong corporate earnings. Companies like Intel, Apple, and Meta Platforms all reported better-than-expected results, which boosted the markets. In addition, tech companies like Microsoft and Tesla led the gains. In addition, the U.S. markets were closed for Memorial Day, which has contributed to light trading volumes this week. This trend is likely to continue into the summer when the earnings season is expected to be much less challenging.
While the S&P 500 rose 1% this week, it remains down 5% year-to-date and is on course for its worst April since the start of the global recession. Despite the recent gains, investors have been on edge about global economic conditions, including Russia’s invasion of Ukraine and China’s ongoing battle against Covid. The Fed has also begun to taper its bond-buying program, which may lead to a rate hike shortly.
Emerging market currencies and stock markets soared this week, led by Brazil. The St. Paul stock exchange index rose by 25% this week, while Brazil climbed by 4% on Thursday, following the arrest of the former president of Brazil. A couple of retailers were also big winners, with Amazon jumping 4 percent and Meta Platforms adding 4.2 percent. These gains pushed stocks higher, extending the bullish trend into a new technical bull market.
Change In The Consumer Spending Habits
The recent COVID-19 pandemic has significantly altered consumer spending habits. A recent global survey by McKinsey & Company examined the impact of COVID-19 on consumer spending. While some industries are better prepared to deal with this threat than others, erratic behavior among consumers has affected a variety of sectors. As a result, consumers have decreased their spending on items that are not essential.
Higher prices on eCommerce sites increased sales by $32 billion in just two years. And while the increase in prices has not impacted overall online consumer spending, higher prices are positively affecting brick-and-mortar store sales. And while Wayfair Inc. increased prices due to inflation, its conversion rate did not decline. That trend is likely to continue as consumers seek value and novelty in the online marketplace.
Improved Economic Conditions
Although recent vaccine approvals raise hopes of a turnaround in the COVID-19 pandemic later this year, the outbreak remains a worry. While new versions of the virus are also on the horizon, the overall outlook is positive. Global economic growth is forecast to rise 5.5% in 2020 and 4.2% in 2021, a strong rebound from the depths of the Great Lockdown. Meanwhile, travel demand has returned sharply and airline operations are being stretched, and many dealer lots remain empty.
Stock Markets Would Probably Open In The Green
Despite yesterday’s disappointing news, stocks are expected to start the day in the green today. The Fed will release its minutes and will most likely impact the markets this morning. Stocks have been in a correction since late April, but yesterday’s late-session rally was fueled by this news. The Federal Reserve’s policy meeting is scheduled to take place on Tuesday, and investors are likely to focus on the minutes as they are released today. While the Fed meeting is not likely to change policy shortly, futures markets suggest that stock indexes will open in the green today.
Investors are keeping a close eye on international indices to determine what will happen in the U.S. market. For example, the Nikkei index in Japan is down 0.1%. The DAX index in Germany and the FTSE in London are down 1.1%. By following those indices, they can get an idea of how the Dow Jones Industrial Average and S&P 500 will perform today.
On a fundamental level, the market is waiting for the last leg of earnings reports. Central banks will be the focus, with the Russian and Ukrainian crises continuing to impact the global economy. In addition, supply chain disruptions and the Russian-Ukrainian crisis continue to weigh on global equities. With these factors, stocks in India are expected to open in the green today. It’s worth noting that the broader market in India will also open in the green.
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