Stock Market Today
Futures in the United States and Europe are trading higher today as investors appear to be more optimistic regarding the performance of equity markets. There are two reasons for this. First, the dovish stance taken by Jerome Powell, the Chairman of the Federal Reserve, last week conveyed that interest rates would not be raised immediately after stimulus tapering and would only be changed once the economy is near full employment with inflation in check. Second, the excellent earnings achieved by companies have provided valuation support, which has become the foundation supporting the surge in stock prices.
The S&P 500 continues to close at record highs despite the emergence of new coronavirus variants hindering economic growth in various parts of the world. The index climbed nearly 20% in 2021 and has not even witnessed a mere 5% retracement. It posted its 53rd record close in yesterday’s session. Strong corporate earnings have supported the bullish sentiment among investors and the S&P 500, as a result, is on track to expand its earnings by 95.4%, which is the quickest earnings growth rate since 2009.
Similarly, the Pfizer-BioNTech vaccine has gained undisputed backing from the U.S. Prevention’s Advisory Committee on Immunization Practices and the Centers for Disease Control (CDC). However, the vaccine still needs affirmation from CDC Director Rochelle Walensky. Earlier, the said vaccine had been permitted by the Food and Drug Administration as well. The endorsements from various agencies would assist the Biden administration in catering to hesitant Americans who are concerned about unanticipated side effects. Hopefully, the approvals will boost American citizens’ trust in vaccination drives and, as a result, help to slow the virus’s spread.
Investors may take more exposure to the stock markets going forward, as we are still in the initial phase of the expansion cycle. Furthermore, low-interest rates along with robust earnings provide a strong case for a potential bullish market and higher stock prices in 2022. Having said that, investors should note that unexpected shocks could have an adverse impact on the financial markets.
The Pending Home Sales data was released yesterday and came in below projections. As per the National Association of Realtors (NAR), contracts signed in July dropped 1.8% in July compared to the expectation that they would rise by 0.4%. The index declined by 2% in June.
The data is significant because it is regarded as a leading indicator of the housing market’s health. The reason behind this drop may be that there is not enough supply to meet the demand of latent buyers. However, listings are gradually increasing and buyers should be able to have more options over the next few months.
Moving onwards, investors should keep in mind that the Consumer Confidence data and the Chicago PMI data are scheduled to be published today. It could provide investors with early insights into how the economy may swing in the short term.
The massive rally seen in digital coins over the last few days has expanded their market capitalisation above the $2 trillion level. The massive surge in the value of altcoins can be clearly seen through the performance of Ethereum.
Over the last 12 months, the value of Ethereum has surged nearly 720%, with its current price near $3,200. This boost in value is based on the potential of DeFi projects, which are worth a whopping $83.8 billion. Venture capital companies are also showing increasing interest in this field. During the first half of 2021, $17 billion has been injected into DeFi and NFT projects, most of which are based on Ether.
The future outlook of Ether also appears to be very promising because, as per JPMorgan Chase’s report, Ethereum’s update to Proof-of-Stake would enhance its value by about $40 billion.
Oil prices rose yesterday but fell from their session highs as the power of Hurricane Ida turned into a tropical storm. The storm propelled officials to curb oil production, of about 1.74 million barrels per day, in the U.S. Gulf. Following the extreme weather, many areas in Mississippi and Louisiana reported power outages. Exxon Mobil Corp stated that it would be stopping production of 520,000 barrels per day at its Louisiana refinery until the supply of utilities resumes.
Investors should also note that tomorrow is a very important day for black gold as OPEC is set to meet tomorrow to discuss the planned rise in oil supply. Moreover, crude oil inventories data is also going to be released on Wednesday.
The price of gold fell on Monday as investors braced for the release of important non-farm employment data later this week. The dollar index rose as traders became more watchful of any deviation from expectations. Initially, gold prices rose as investors responded to dovish comments by Fed Chair Jerome Powell. Powell stated that the withdrawal of the stimulus could happen in 2021 but gave no timeline for the said tapering.