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Vaccine news pushed Dow Jones to record high
Information is not investment advice
What happened? V-shaped recovery!
The Dow Jones surged to its all-time high for the first time after the virus slump. It has almost touched the 30 000 level! We must admit that it was one of the latest stock indices that made it, but in comparison to its peers, the Dow Jones was one of the most damaged. For example, it took 126 trading days for the S&P 500 to set a record high after the Covid-19 outbreak, 76 days for the Nasdaq, and 191 days for the DIJA. However, looking at its background, it was the fastest recovery from the crash in over 30 years.
Why? Vaccine hopes!
Upswings of the stock market are linked with the recent report from Moderna. The company claimed that its Covid-19 vaccine prevents infections by 94.5%. Notably, Pfizer and BioNTech revealed a similar report last week but revealed 90.0% effectiveness. Investors streamed their capital to undervalued stocks, those which were hit the most as they have a high potential to grow. Actually, that’s why the Dow Jones jumped so much this time.
What does it mean?
The stock market is often used as a prediction of what would happen with the economy in the near future. If the stock market rebounds and overruns the pre-pandemic levels, it means the total economic recovery is getting close as well. "Short-term, there is still major cause for concern, with covid cases mounting around the world," says CaxtonFX, "long-term, there is still MAJOR cause for optimism, with a potential way out of the crisis."
The Dow Jones is edging higher. The moving averages are in ascending order below the price, which proves the long-term uptrend. If it manages to break through the key psychological mark of 30 000, it may rise to fresh highs at the next round levels such as 30 500 and 31 000. In the opposite scenario, if it drops below the low of November 12 at 28 900, the way to the 50-day moving average of 28 000 will be clear.
*Remember that to trade the Dow Jones with FBS you should use Mini Dow Jones Futures, which is YM-20Z for the current period, which expires December 18.
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