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Despite the current mix of performance with respect to the individual performances of the companies, analysts are optimistic that there remains a massive upside for the stock market.
Tuesday marks the second trading day of the new year and the United States stock market indices were divided on the frontlines with growths and slumps characterizing the market. Investors notably moved in and out of tech stocks on the grounds of a continued spike in bond yields.
The Dow Jones Industrial Average (INDEXDJX: .DJI) grew 0.59%, adding 214 points to end Tuesday’s session at a record 36,799.65. Despite early upticks that the S&P 500 (INDEXSP: .INX) picked up during the trading session, it ended the day at a slight loss of 0.063% to 4,793.54. As tech stocks recorded an enormous plunge across the board, the Nasdaq Composite (INDEXNASDAQ: .IXIC) ended the day in losses atop a 1.33% slump to 15,622.72.
The US stock market, per its current growth outlook, has not shown a united front in terms of restoring combined investors’ confidence in the investing world this year. While the Omicron variant is no longer a significant strain of concern according to many studies that show it is not as deadly as the prior strains, the new worries that loom revolves around the potential interest rate hikes.
The US Federal Reserve resolved last year to increase the interest rate for the first time in about 2 years as the impact of the coronavirus pandemic tapers down. With the potential rate hike, there has been a number of divergent reactions in the market, with growth recorded by stocks that will benefit from these rate hikes, and slumps on stocks bound to be the most impacted.
Banking stocks are amongst the biggest beneficiaries of the rate hike and shares of JPMorgan Chase & Co (NYSE: JPM) rose 3.79% to $167.83, Morgan Stanley (NYSE: MS) ended Tuesday’s session up 4.06% to $104.26, Goldman Sachs Group Inc (NYSE: GS) also joined the top earners with 3.07% surge to $407.48, while Citigroup Inc (NYSE: C) added 0.78% to $63.59.
Despite Current Divide, Stock Market Is Billed for More Growth
Despite the current mix of performance with respect to the individual performances of the companies, analysts are optimistic that there remains a massive upside for the stock market as the year runs along.
We believe there is further upside for stocks, despite a strong run so far,” wrote JPMorgan equity strategists led by Mislav Matejka in a note Tuesday, adding that “The new variant is proving to be milder than the prior ones,” and that “We continue to see gains for earnings, and believe that consensus projections for 2022 will again prove too low.”
As the market tilts towards recovery, investors are bound to be so sensitive to growth tickers like job data, bond yields, and the modalities in which the Feds will go about their bond purchase reduction program respectively. While the stock market has a history of standing strong despite uncertainties, there are expectations to see a roller coaster ride even as the market fights for steady growth in the long run.