The beginning of last week brought record highs to the American stock market.
The main reasons for the rally were hopes that the approval of massive US stimulus and the rollout of coronavirus vaccination programs around the world will lead to a rapid economic recovery. Yesterday on Sunday, US Treasury Secretary Janet Yellen called on Congress to pass a $ 1.9 trillion stimulus plan. President Joe Biden, saying that if adopted, the United States could return to full employment by 2022. The Senate and House of Representatives passed a budget resolution last Friday that will allow Democrats to approve the new aid package by a simple majority, i.e. without the need for Republican approval.
On Tuesday the market showed mostly negative dynamics. Investors continued to closely monitor the development of the situation with the adoption of additional economic stimulus in the United States. White House spokeswoman Jen Psaki said approval of the stimulus plan is likely to advance through a fast track process that Democrats can use to pass the package with a simple majority in the Senate.
The next day the negative dynamics continued, the market sentiment was influenced by statements by FRS Chairman Jerome Powell, who said that the Fed would continue to support the economy by keeping rates low and continuing to buy assets. Powell reiterated his position that a "patient, stimulating monetary policy" will be key to rebuilding the economy to a healthy state. This means that the Fed is unlikely to raise interest rates or reduce bond purchases for the foreseeable future. Market participants also analyzed quarterly reports of companies
On Thursday, market participants focused on statistical data. The Labor Department said initial claims for unemployment benefits in the US were at a seasonally adjusted 793,000 for the week ending February 6, up from 812,000 in the previous week. Economists had forecast 757,000 applications. Stock market optimism also supported a solid corporate reporting season. According to CNBC estimates, of the S&P 500 components that have already reported, 80% posted better-than-expected earnings in the most recent reporting period.
The week ended with a slight increase. The market was preparing for a long weekend, and investors were analyzing the data on the consumer sentiment index. US consumer sentiment unexpectedly dropped to a six-month low in February, according to a report from the University of Michigan. According to the report, the consumer sentiment index fell to 76.2 in February after falling to 79.0 in January. The drop came as a surprise to economists who had expected the index to rise to 80.8. Due to the unexpected decline, the consumer sentiment index fell to its lowest level since August 2020. The decline in the overall index was due to the fact that the consumer expectations index fell to 69.8 in February from 74.0 in the previous month.
