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Stock America is very restrained in its growth

DATE OF PUBLICATION: 2021-01-22 13: 41: 31On the stock markets of the United States of America, all yesterday’s movements were not very significant, and the changes that did take place were heterogeneous. The main stock indicators completed the trading session on Thursday in different directions. Nevertheless, there were those among them who did not support the general trend and once again reached their maximum levels. These indicators were Standard & Poor’s 500 and NASDAQ Composite. Until recently, market participants were in high spirits, as they waited for the publication of stronger than before corporate statistics. However, now it is becoming increasingly clear that the labor market is still unable to recover to its pre-crisis level and government indicators. This means that no positive statistics can change the mood of investors too seriously. The beginning of the new year was very difficult for the stock market, but the indices were able to cope with the bulk of the problems that had piled on them and even showed growth. As a result, their increase could be on average more than 2% for each. The reason for the positive dynamics, first of all, was the expectation of the recovery of economic recovery in the United States due to the possible ratification of a new, larger-scale financial stimulus program proposed by Joe Biden. As a reminder, two days ago he passed the official inauguration procedure and fully assumed the rights of the president, which only strengthened the hopes of investors. The package of extended incentives was presented last week. Its total volume consists of $ 1.9 trillion, and items of expenditure include such items as direct payments to American citizens, additional premiums to unemployment benefits and the extension of the program itself for paying these benefits for a longer period. Thus, the stimulus expansion program looks very attractive in order to ensure a good recovery and the beginning of the recovery of economic growth in the country. Against this background, stock indicators felt more than positive and rapidly increased their positions, which led to new record values. As soon as Joe Biden officially took the presidency, he immediately began to cancel the decrees issued by the former leader of the country. Among others, he overturned Donald Trump’s decisions to withdraw America from the World Health Organization, as well as from the Prague climate agreement. Of course, such political decisions could not fail to remain unnoticed by market participants who began to assess the current events more soberly. Among the main news that aroused increased investor interest was the meeting of the main EU regulator – the European Central Bank. As expected earlier, the regulator did not radically change its policy and left the base interest rate on loans at the same low level at around 0%. The rate on deposits was also not revised and is 0.5%. The rate on margin loans remained at around 0.25%. At the same time, it should be noted that the ECB leadership said that key rates are unlikely to be revised until the inflation rate reaches its target and is not firmly established on it. Recall that this level is 2%. Among other things, at the meeting of the European regulator, the most difficult topic of recent months was raised – the rapid growth of coronavirus infection and the fight against the pandemic. According to the latest statistics, the incidence is growing, which will inevitably lead to tougher quarantine restrictions, which means that the pressure on the economies of European states will increase. Therefore, we should expect that in the fourth quarter of last year, the region’s GDP will be lower, and the recovery period for economic growth will be further postponed, while the supporting factor is corporate reporting, which gradually began to come from large companies. Everything is much better here than analysts previously assumed, which cannot but please market participants. However, this is not enough to sustain stable growth of stock indicators for a long time. There are still many problems on the path of economic growth of the United States of America that need to be solved. In particular, we are talking about the difficult situation of the labor market. As it became known, last week, which came to the end of January 15, the number of new applications for unemployment benefits turned out to be 26 thousand less, which lowered the figure to 900 thousand. However, this was a very restrained decline, since, according to preliminary forecasts analysts, there should have been a more substantial contraction. The Dow Jones Industrial Average by the close of yesterday’s trading fell 0.04%, or 12.37 points, which sent it to the level of 31,176.01 points. Standard & Poor’s 500 Index increased 0.03%, or 1.22 points. Its current level was 3,853.07 points. The NASDAQ Composite Index increased by 0.55%, or 73.67 points, and turned out to be around 13,530.91 points. Material provided by InstaForex – Source – InstaForex

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