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Investor Confidence is on The Rise

Investor Confidence is on The Rise

Stock Market Today

Stock futures in the United States and Europe are rising today, reflecting a resurgence of investor confidence, bolstered by the approval of Pfizer-Covid BioNTech’s vaccine by the FDA. In yesterday’s session, the Dow Jones Industrial Average jumped 0.61%, and the S&P 500 index climbed 0.85%. The Nasdaq, the tech-savvy index, rose 1.55%, and the Russell 2000, the small-cap index, hopped 1.88%.

The vaccine news aided markets in starting the week on a positive note, with stocks associated with economic recovery showing strength on Monday. The stock market’s recovery was facilitated by optimism that the approval would serve as a foundation for additional steps to accelerate economic growth, which is currently slowed by the advance of cases caused by the delta variant.  The approval is critical because it will persuade people who are still hesitant to get their vaccinations due to concerns about unwarranted side effects. Pfizer’s stock price jumped 4% following FDA approval, while BioNTech, its German vaccine partner, improved by nearly 10%.

Stock traders should also note that the second-quarter earnings season is coming to an end, with more than 90% of the companies in the S&P 500 having reported their results. Following a strong financial performance, the S&P 500 is expected to increase its earnings by 94.7% year over year.

Purchasing Managers’ Index

The Purchasing Managers’ index data for various regions was released yesterday. The index acts as a measure of corporate health for analysts and investors alike, and it paints a mixed picture of how economies are currently behaving. In the United Kingdom, the manufacturing and services segments showed a steep decline, dropping to their lowest point in nearly 6 months. Similarly, data from Australia revealed that the country’s private sector slowed in August due to lockdowns aimed at containing the spread of Covid 19.

On the other hand, activity in European markets rose at its fastest rate compared to the same in the last 20 years. Employment continued to climb at the same pace as was seen in June. The growth in employment is at a 21-year high.

The data indicates that stock markets are likely to remain volatile in the short term with governments actively responding to an everchanging coronavirus situation while trying to tailor their policies to drive their respective economies forward.

Currently, the major issues holding back investors from making any major moves are rising inflation and falling economic growth. These two factors would play a major role in the Fed’s decision relating to the timeline for stimulus tapering and interest rate hikes. Investors should continuously monitor such economic reports and meetings to figure out when and how the Fed will react in coming months.

Bitcoin

Bitcoin was finally able to cover ground above the $50,000 territory, which was considered a crucial psychological resistance for crypto traders. Overcoming what some had considered major challenges and barriers, the king of crypto is likely to test all-time highs once again. For the time being, investors can expect the notorious digital coin to trade in wider ranges.

The sentiment in the market was boosted by PayPal’s update that it would grant access to consumers in the United Kingdom to crypto transactions. This is the company’s first move to expand its crypto services internationally, indicating a rapid adoption of the industry.

Bulls rallied after remarks by Musk and Cathie Wood, of Ark Invest, provided some support for the falling crypto prices. Furthermore, rumours about Amazon’s potential involvement in the crypto sector also helped the bulls to drag the ill-famed digital tokens to month-long highs. The retracement of prices has helped the market capitalization of digital currencies to rise from $1.2 trillion a month ago to nearly $2.2 trillion now.

Investors should understand that the hash rate has also displayed a significant turnaround from its July lows. Hash rate is basically an indicator of how much computational power is being pumped in to improve the Bitcoin network. An improvement in this indicator shows that the sector is rapidly adjusting after clampdowns seen earlier in China.

Oil

Oil prices rose on Monday, capping off their worst week since October, as demand is expected to rise in the coming months. The news that there were no cases in China fuelled the forecasts. This is significant because China is the world’s largest importer of oil, and putting a stop to rising cases would mean the country is focusing more on economic growth in the short term. A boost in activity, as a result, would fuel crude oil consumption in the future.

Investors should keep in mind that crude oil inventory data will be released tomorrow. This information would provide traders with guidance on the potential price movement of crude oil over the next few days.