US stocks are climbing with the S&P 500 and Dow Jones Industrial Average (DJIA) both seeing record closes.
The recovery in stocks after an unstable few weeks is being helped along by optimism about the reopening of the economy and a renewed surge of consumer spending and travel.
As people get their shots and their checks, things are beginning to open back up and that’s also reflected on the markets as investors head back towards the kinds of investments that show confidence in a renewed consumer surge and normal economic life.
As for fears of inflation and a potential raising of interest rates, the Federal Reserve has reassured people that they’re going to go easy for the time being as the economy starts its comeback and people get back to spending and going to work.
‘The Fear Factor Has Now Gone Away’
ING financial researcher Carsten Brzeski said that optimism is increasing and the markets are adjusting accordingly.
“The fear factor has now gone away, so markets are now finding an equilibrium. Bond yields will go higher, but central banks are not backing down. The Fed meeting will clearly be crucial and essential in terms of further educating markets as to what the Fed is up to,” Brzeski said.
Investors are starting to get back into stocks that reflect economic optimism as vaccinations progress quickly and COVID relief checks are on their way. The increased consumer spending and even travel that’s going to happen will be a major and immediate boost to the economy that gives reason for hope.
“With the reopening of the economy, this fiscal stimulus in the form of checks will have a stronger impact on consumption. Lower-income households will spend this check almost entirely,” Brzeski explained.
Stocks like AAL (American Airlines Group), MGM Resorts International (MGM) and Las Vegas Sands (LVS) surged on Monday as people began planning Vegas vacations again and the tourism industry could look forward to an increased cash flow of excited visitors.
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Still a Ways to go, But Things Look Brighter
Although there is still a ways to go, things are looking brighter. It’s important that the Fed keep a balanced approach heading into this recovery so people see that it’s moving to counteract inflation and keep things stable but also giving space and freedom for the economy to come back from the brink.
With casinos and Las Vegas doing well in the market as well as airlines stocks like AAL starting to come back, there are all sorts of good signs. Around the world stock markets are also starting to show signs of pre-pandemic normalcy, although there is still a long way to go.
It’s also worth noting just how intense things are getting in the cryptocurrency sector, with Bitcoin surpassing $60,000 per Bitcoin this past Saturday and surges in many other kinds of cryptocurrency coins. Meanwhile the price of gold continues to rise and remain a good investment going forward.
As people start returning to normal and going about their business, let’s hope that the stock market and economic life can start returning to a basic balance. Under President Trump the stock market surged to levels that wouldn’t have been even dreamed possible, but the pandemic snatched away years of gains and put this country into a deep crisis.
Biden is not the right guy to see this country through its current moment, but if current conditions come together to lead to a stock market recovery and a return to normal life we should all rally together and support that, since it’s good news for everyone.