Market News Battle for the Bull Market What happened GameStop mania is back. On Wednesday, the company’s share price suddenly shot up 104% right before the closing bell. The rally continued into Thursday, with GameStop now up 151% from where it started the week. As for the rest of the market? That’s looking a bit shakier. On Tuesday, the Nasdaq dipped 3.9% before recovering ground. Come Thursday, the market was solidly in the red again with small caps and tech leading the way. Bull vs. Bear The big question driving the market this week: is too much money a good or bad thing? In one corner we have Biden readying a $1.9 trillion in economic stimulus that will not only flow into the economy but also the stock market. Beyond all that stimulus, Goldman Sachs estimates U.S. citizens are amassing $2.4 trillion in “forced savings.” That is, excess money that's been saved during Covid and could begin rapidly pouring into the economy this summer once vaccinations are widespread. Stimulus + $2.4 trillion spending spree... Sounds good for the market, right? Well, not so fast. Because Treasury yields are now rapidly climbing. If you’re invested primarily in stocks, that’s a big worry. A major contributor to the stock market’s recent rise has been how low interest rates are. With bond yields now rising – on fears of renewed inflation from all this money flowing into the system – investors are selling stocks. Their worry: rising interest will lead to an even greater market sell-off as investors flock into other assets. The investing angle So, what will the coming months look like for the market? In one corner we have GameStop and “meme” stocks soaring again. (Bull market!) And in the other corner, we have rising fears over inflation. (Bear market!) With rapid vaccine distribution, more than $4 trillion in stimulus and “forced savings” hitting the economy, and record corporate profits anticipated for 2021, it sure seems like stocks still have tailwinds behind them. Wall Street is clearly betting the market has further to run. One hedge fund recently put out a job posting that pays $200,000 per year for someone to surf Reddit and look for the next GameStop (we told you we weren’t making this up!). Regardless of the broader market’s next moves, if you’re on the lookout for high-quality companies that could see growth accelerate, the inflow of “forced savings” and economic stimulus combined with the likely easing of Covid restrictions could lead to some economic fireworks in the second half of 2021. If you’re looking for a stock that could see massive tailwinds in the second half of the year – and we’re willing to bet you’ve never heard of - then scroll down to our stock of the week! |
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