Despite the negative news and worrying headlines, we recommend traders to make mental reframing of the situation. This way, you can look at the market from a different perspective. Let’s observe how you can take advantage of the uncertainties and make the fundamentals work for you!
Why has S&P 500 gained this year?
Information is not investment advice
S&P 500 and other stock indexes rose over the past 12 months despite the global recession. Should you buy it now?
Coronavirus cases have almost reached 5 million. By the way, it’s just the official data, nobody really can say what is the true picture. Moreover, unemployment claims surged to unprecedented levels, economic activity fell to unseen lows. This list can be prolonged further and further. However, that didn’t bother investors. Why?
Fed’s support measures
The first reason is that the Fed took all efforts to mitigate the damage from the coronavirus. It cut rates to zero, poured trillion dollars through aid packages, bought corporate bonds both high-rated and junk. After all this, Jerome Powell assured that there is a lot more ammunition the Fed can use if needed. So, there is no doubt that the economy will be safe no matter what. Those comments, of course, pushed the S&P 500 price upward.
Virus will be gone soon
We are approaching step by step to the end of the coronavirus pandemic. Many biotech companies are working day and nights to create the desired vaccine. Yesterday we got some promising results from one of them – Moderna, Inc.! After those optimistic news, the stock went up.
Coronavirus didn’t impact on companies of S&P
According to Ned Davis Research, about 58% companies of the S&P stock weren’t significantly damaged by the coronavirus. Moreover, top 5 companies such as Microsoft, Apple, Amazon, Facebook, and Alphabet outperformed this year. So, S&P 500 gained due to those 5 ones.
The long-term prognosis is bearish
Now S&P gains, but most analysts believe that soon the S&P will reverse. As lockdowns eased and small businesses started to reopen, the coronavirus cases may rise again. Moreover, the Q2 earning season will bring terrible data that nobody has ever seen before. The negative sentiment will push stocks down eventually.
The S&P had been rising since March 23, then the price froze and entered the horizontal corridor. It hit 2950 twice and struggled to go up. That’s why, there is a high possibility that the price will soon fall down to 2784. If it does, it will dip further to 2705. Nevertheless, if some factors push it above 3000, it will surge to 3135 then.
The US Federal Reserve may refrain from more aggressive interest rate hikes in March due to geopolitical risks after Russia's special operation in Ukraine…
Hello from the far 2022! FBS analysts have used some magic to travel to the future and brought you some hilarious predictions.
Ichimoku Kinko Hyo CHF/JPY: The CHF/JPY pair is now trading within the Kumo…
What will happen? Amazon announced the company is going to make a 1 – 20 stock split on June 3 after the trading session close (23:30 GMT+3)…
The pandemic continues hurting economic activity in China, the war in Ukraine is hitting the entire European economy, and the Fed's efforts to control inflation threaten to trigger a recession.