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Positive news surrounding COVID-19, the discovery of a vaccine, lockdown reopenings all played a big part in fueling the growth on Wall Street in 2021.
The US stock futures traded steadily during Wednesday’s overnight markets as the Wall Street investors prepared themselves to enter the second half of 2021. S&P 500 increased by 0.15%, Nasdaq gained 0.05% while Dow Jones futures gained 50 points.
Wednesday’s trading saw the industrial average for Dow Jones rise by 210 points. The incredible rise was aided by Walmart‘s pop-in of 2.7%. On the other hand, S&P closed at 4,297.50, a 0.13 growth and a new record. Nasdaq composite’s performance was below par, giving the exchange an overall loss of 0.2%, but Netflix Inc (NASDAQ: NFLX), Jeff Bezos‘s Amazon.con Inc (NASDAQ: AMZN), Facebook Inc (NASDAQ: FB), and Google‘s Alphabet Inc (NASDAQ: GOOGL) closed the day lower. Major averages for the second quarter, which is also the end of first half of the year, were commendable. As per the year’s projections, Down has grown by 12.7% and it’s 1.7% short of the all-time high it has ever achieved. S&P 500 and Nasdaq Composite were up by 14.4% and 12.5% respectively. This was the fifth successful month in a row for S&P 500. In June it gained 2.2%. Additionally, the broad index also posted its best performance since 2019.
What Fueled the Growth on Wall Street in 2021
All economies were greatly influenced by the COVID-19 pandemic, and the investment markets were not exceptional. However, positive news surrounding COVID-19, discovery of a vaccine, lockdown reopenings all played a big part in fueling the growth on Wall Street in 2021.
Jim Paulsen, a strategist for growth at Lethold Group was quoted by CNBC saying that the rotation of leadership, which made way for inclusive and broader participation, facilitated achievement and resulted in equal gains.
During the two quarters of the year, Russell 2000 gained over 17% even as stocks were being negatively impacted by the Covid-19 situation. Paulsen suggested that the economy will not be negatively affected, and that he sees it staying strong for the remaining part of the year. He however said that the questions that should be addressed are: how much panic related to inflation returns back to the market, how will the bond yields perform, and how hawkish will the Federal Reserve’s policies be.
The strategist revealed that if there are no inflation fears, and yields associated with bonds also remain low, investors should wait for an improvement in tech and growth stocks, which will undoubtedly propel the market to higher highs. On the other hand, if growth in the economy fuels fears of inflation, which will outrightly have an impact on the bond yields, there will be fear of correction. He added that more leadership must be geared towards cyclical stocks, less cap stocks, and also international stocks. On Thursday, data relating to joblessness is expected to be released. Pundits and market watchers think that the employment figures will reduce from 411K to 390K.