Why The Stock Market Right Now Is Stronger Than Ever
The value of many stocks shot up Friday after the government reported that jobs increased by 2.5 million in May and that the percentage of unemployment went down. The astonishingly promising employment figure stirred hope among stock brokers and investors that the coronavirus pandemic was easing and the economy rebounding.
Reports show trading activity at some of the top trading platforms in UK and the US have increased. Increases in market activity can explain why we see indexes such as the Dow Jones racing up by over 800 points; that’s about a 3.22% increase, and the S&P 500 increased by 2.6%, while NASDAQ gained 1.4%.
In April, as some states lifted the stay-at-home-orders, businesses began opening up. Right now, there’s much optimism, especially on Wall Street, that the opening businesses will fire up the economy. Quite a number of investors are using the top online stock brokers to take advantage of the current market situation.
Before the Labor Department’s report was read out, many experts on Wall Street anticipated that the coronavirus scourge would continue hemorrhaging jobs for a long time. Some economists had even predicted that the rate of unemployment would hit about 20% by June. Surprisingly, this has not been the case.
Ian Shepherdson, a chief economist at Pantheon Economics, termed this as the biggest surprise on the payroll history. He said the secret in the stability in the job market is that many companies are re-hiring the employees they had laid off. The companies that laid-off workers in March did not have to advertise vacancies, they simply recalled their former employee via email, text, or call.
While the health experts are still debating about when and how economies should reopen, some states have already eased their lockdown measures. Even though there are still some restrictions on movements across borders, movements within states are allowed, and some companies offering non-essential services are now operating thus increasing the employment rate.
The employment gains in May also coincided with a remarkable leap in the stock market. Last week, stocks gained about 40% after hitting the lowest point in four years in mid-March. According to Ryan Detrick, a leading market strategist at LPL Financial, this increase is the highest 50-day rally in the last six decades.
The stock market right now is stronger because many investors are focusing on how the economy will perform after recovery. Companies are more aggressive than ever before as they want to recover the lost time. That’s why the best online trading sites have seen an influx of clients coming to trade with them.
Two strong forces are operating on the economy right now and they are pulling in opposing directions. On one hand, some businesses are still being disrupted to a scale never imagined before. While on the other hand, investors bet that the timely interventions by the government would protect companies against the anticipated losses.
If one had to compare share trading platforms offerings, they will notice that the strongest performers in the stock market are the companies that were severely affected by the lockdown. These include airlines, hotel chains, entertainment, and cruise lines.
The current stock market pricing is a clear sign that investors are optimistic that the economy will rebound faster, and that’s why they are willing to invest in stocks.
If you looked at stock prices on trusted trading brokers, the stock market in the US is firing on all cylinders – quite bullish for its short-term prospects. In fact, by last week, 90% of NYSE stocks were trading above their 20-day moving averages, while 94% of those of S&P stocks were trading above their 50-day moving averages.
Everything about the coronavirus pandemic has been unbelievably fast. Within a short time after the first case was reported and the virus spread worldwide, the economy went down on its knees. And now, the recovery process seems to take place quickly. We also have to remember that economic recovery was bolstered by the trillions of dollars the Federal Reserve pumped into the economy to prevent it from crashing.