The market this Wednesday has witnessed a marginal rise of stocks. This happened as Wall Street struggled to find its direction on the second day amid the rising rates. Despite the political and pandemic issues, the rise seems to be a good news for the investors. The Nasdaq witnessed around 0.6% of rise, while S&P 500 could gain 0.2%, while the Dow Jones Industrial Average seemed going flat. One of the best performing Dow components in the market was Intel rising to 7.6%, while Boeing, UnitedHealth and Dow Inc seemed to be going down. The traders had a good time digesting this inflation data release as they could notice the U.S. consumer price index reaching 0.4% in December, which seemed in line with a Dow Jones estimate.
In the first week of 2021, the stocks seemed rising and since then it has stalled out. However, this Tuesday, the market witnessed a change and people could see a decade old Treasury doing its brief trade 1.18%, which seemed the highest level since last March. Thus it proved out to be a benchmark rate for the company getting the additional 20 basis points. As per Credit Suisse, the current rise in rates, the traders can think of investing in pro-cyclical sectors like energy and financials. However, the rising rates can affect the growth stocks, which many of the market experts have been predicting during the pandemic. On the other side, there seemed some amount of expectations for the additional fiscal stimulus that emerged as the key reasons behind the rise. As the new President takes the charge, he is going to share the details about his economic plan soon.
As per Jason Draho, the UBS Global Wealth Management head of America’s asset allocation even we are considering the least amount of $500 billion fiscal package can include additional stimulus checks, funds for healthcare and vaccine disbursement along with extended unemployment benefits will still give a good boost to the current economic growth in 2021. With the muted session this Tuesday, the major averages would remain at the lower side for the entire week. The Nasdaq Composite would remain on the lower side in terms of performance going down by around 1%. However, one can see the small caps to be the bright spot in the market allowing the Russell 2000 to rise by more than 1% this week.
As per Mark Hackett, the chief of investment research at Nationwide feels that the market rally seemed to have taken a break this week. With this the risk indicators and sentiment would continue to showcase the investor optimism along with the credit spreads coming at the tightest level ever since the pandemic started. Thus all the human tendencies like fear and greed have gone too low during this bad time. However, 2021 has brought some ray of hope as the US economy is going to experience some good tailwinds with some additional fiscal and monetary stimulus taking the market away from the pandemic effect. Now, experts have hope to witness some above average growth in the stocks.