On Tuesday, the DOW Jones Industrial Average Index posted its best single-day gain since 1933! The only question lurking in everyone’s mind is whether the US stock market has finally bottomed out or not? Adding to the joy, even on Wednesday, the Index showed hints of gains and that would be back to back 2 days of standard gains for it.
While the vibe in Wall Street feels a lot more positive now, everyone is skeptical about this recovery of the index. There is a high doubt on the fact that whether profit taking is about to come or not.
What brought this surge in stocks?
On Tuesday the stock market witnessed history in the making. The multi-trillion-dollar stimulus package that was being discussed in the senate for the last 2 days has finally been unveiled. This bill will definitely boost the US economy to a great extent after it got slumped to the ground due to the outbreak of Coronavirus. On top of this, Trump said that the country won’t remain in a lockdown for long now and it is expected that normal routine will resume from April 12. This deadline to “open business” has been extremely relieving for the entire America and it has helped in bringing positive vibes to the stock market. Such a declaration has been made despite the projections of Coronavirus cases increasing and reaching its peak during the mentioned period of time. Donald Trump believes that the cure might do more damage than the problem and this is why he is willing to bring back normalcy to the nation at the earliest.
What can stall this stock market rally?
The rally in the US stock market isn’t something worth the joy. Before investors step in, it is essential to note that a fall is impertinent. The economic data that is about to hit the market in a few days will be disturbing enough to hamper the stock market rally majorly. The unemployment data will be in the spotlight on Thursday and the drastic number of unemployed people will put the market in a rear gear. The jobless claims are set to increase by 2.25 million which takes the figure higher than 1982 and 2007-2009 recession period.
Unless there is something positive and surprising in the economic data, the market will continue to be volatile. The economic upset that Coronavirus can cause is largely unknown as of yet and this is why this won’t be a prolonged stock market rally as per experts. Given the fact that Donald Trump wants to resume America, the scary days are about to come if the spread of the virus doesn’t stop before the nation re-opens. The restrictions have somewhat kept the virus at bay but if things resume, the risk will double up without any doubt.