S&P 500 rallied as the market closed today, almost reaching an all-time high before the coronavirus pandemic shut down the global economy. The S&P 500 index closed at 3368.6 points, 20 points away from an all-time high at 3388.8.
The non-technology stocks rallied today to catch up with the technology stocks that have been prospering during the pandemic driven lockdown. Based on a CNBC report, Boeing, Dow Inc., Caterpillar, JPMorgan Chase are among the best performers so far in the blue chips index to gain momentum to drive the Dow Jones Industrial Average close to its all-time high.
Energy stocks and industrial goods are also showing a strong recovery in all major indexes.
The strong Q2 earnings, positive job report, and the coronavirus relief program’s extension propelled the stocks that made up the major index to continue to gain strength.
The relief program includes payroll tax holidays, student loan deferment, and unemployment benefits extensions. The benefit was initially set for $600 per week, but it will be reduced to $400 per week under the new stimulus program.
The Federal Government continues to face legal challenges as the Democrats controlled Congress will still not approve the stimulus program.
Strong Recovery on US Major Indexes
The graph shows the comparable return of Major US Indexes that include Nasdaq 100 (red), S&P 500 (blue), and Dow Jones Industrial Average (orange).
The Nasdaq 100 index is dominated by technology companies that prosper during the lockdown as an enterprise, school, entertainment, and shopping online.
The demand for video conferencing, online streaming, online education, and e-commerce platforms continues to rise and help its earnings in the second quarter of this year.
The Nasdaq 100 index recovered to its pre-pandemic all-time high at 9629 in just over 2 months and hit another record all-time high today at 11,125. Anyone who invested in the Nasdaq 100 index at the bottom of the market has gained a 59% return today.
S&P 500 and DJIA indexes are made up of companies that operate in broader economic sectors. The recovery lag is caused by the sectors that were hit the most by a coronavirus.
These sectors include transportation, retail, airlines, and brick-and-mortar entertainment. However, the broader sectors have shown some recovery after better than expected Q2 earnings announcement plus the stimulus program and the Fed’s monetary policy for liquidity injection.
S&P 500 index has gained 46% from the market bottom in March, followed by a 49% gain for DJIA. Will this trend continue? Fiscal and monetary policies mainly drive recovery.
These policies can continue as long as the core inflation is below the 2% target. The quick answer will be yes, but the investor should be cautious as the core inflation is currently trending up at 1.2%.
Photo By Robert Bye on Unsplash