Last Tuesday was a turnaround point for the US stock market as it closed an all-time high which was a brighter phase after the COVID recession took over the US economy. The United States has almost one-fourth of the global COVID-19 infections and this was the reason for the economic fallout of many companies. This pandemic has been the worst in a century and led to the sharp turnovers for the stock market as well.
Investors have shown interest in the rising housing market, corporate profits, and consumer spending. The financial markets trade on the news or the company’s progress. There have been signals of the improvement in the labor market but the overall unemployment rate was about 10 percent in July.
The technical stocks like Microsoft, Apple, and Google have gained momentum as the investors have been trusting these stocks for the reason for their consistent growth in the past few years. Apple is the most valued public company and the stocks have a positive impact on the index.
There are challenges associated with the stock market at the present. The news of the second coronavirus wave and tensions for the US-China trade has been the most important reasons. The presidential elections in the US are due in November which could be a major concern for the stock companies to grow. The deteriorated phase of the US economy slowed the gains achieved through the stock market. Investors are hoping to get a better status of the market, mainly with the highly reputed stocks.
How stocks are improving in the recessional phase?
During this phase of the highest unemployment rate and odd financial condition of the companies, this market improvement stage might give a positive scope to the investors. Higher stock prices during this phase are quite unusual. The US economy had seen the declined phase due to pandemic. All the stocks went down in the mid of March. However, investors have come up with the trends of trusting the valued companies and anticipate to view the markets with forwarding looks.
The previous data of shattered GDP and unemployment rates are not putting the morale of investors down. The stock market got a jump on 11 August after the Q2 results were announced for many companies. The strength of the US consumer was raised and hence, companies like Walmart and Home Depot showed better expectations for earnings even with the muted stocks.
There is even a positive response for the American housing market after it went almost to null levels in March when COVID started affecting people. However, the constructions have resumed to higher levels in the last months. The homebuilders have gained a positive approach and there is a ray of hope seen in the construction industry. The builders started the new home construction at a pace of $1.5M level in July. The treasury yield dipped below 0.34% in March and it went up to $0.68% in August.