Feds full of ammunition vaccine news helped Dow up 3.9percent

category:Finance
 Feds full of ammunition vaccine news helped Dow up 3.9percent


On Monday, U.S. stocks hit their best performance in more than a month, with investors cheering on news of a vaccine trial by Moderna.

The Dow Jones industrial average rose 9.11, or 3.9 percent, to 24597.37, after surging 1000 points in late trading. The S & P 500 rose 3.2% to close at 2953.91, while the Nasdaq composite rose 2.4% to 9234.83. The Dow and S & P 500 both posted their biggest one-day gains since April 8, while the NASDAQ posted their best one-day performance since April 29.

Mondays performance of the U.S. stock index expanded its recent gains. Last week, the U.S. released a series of gloomy economic data, resulting in weekly losses of the Nasdaq composite index and the S & P 500 index of 1.1% and 2.2%, respectively, which set the worst week since March. The Dow fell for the fourth straight week. But with Mondays multiple rallies, US stocks are back on fire.

Powell called the Fed still full of ammunition

He also stressed: at present, the scope and speed of economic downturn is unprecedented. The Federal Reserve should do its best to alleviate the current difficulties, and its actions are only part of a broader response.. We still have a lot to do to boost the economy, and we have more ammunition than that.

After the U.S. Treasury launched a large-scale stimulus plan, the market estimated that the Federal Reserve has the ability to inject nearly $2.6 trillion of liquidity into the market. In addition to the previously opened unrestricted asset purchase and measures such as reducing interest rates to near zero, the Federal Reserve is currently injecting about $100 billion of additional liquidity into the market. At this level, the Fed does have more ammunition to support its policy implementation.

At present, however, the Federal Reserve is more likely to continue to inject a lot of liquidity and expand its support for credit markets at the right time. Steve blitz, an economist at tslombard, believes that the approach of the Federal Reserve to expand credit is not limited to the stock market, bond market, etc., and the goal is to expand credit in all aspects in the capital market. After all, the Federal Reserve has set up a series of loan mechanisms, covering not only large financial sensitive companies, but also small businesses and individuals affected by the epidemic. This also reflects the intention of the Federal Reserve to fully protect the banking system: when the credit of the private sector is limited, enterprises will face liquidity crisis and bankruptcy risk, enterprise bankruptcy will affect the cash flow of commercial real estate, and a series of chain reactions will eventually damage the profitability of banks. The Fed has always put the protection of the banking system first. And Powell stressed that the Federal Reserve should not only target the stimulus measures to Wall Street, but also help the affected workers and small enterprises. When necessary, the Federal Reserve will provide all-round additional support to stabilize social confidence. At the same time, as states and cities gradually return to public life, investors generally have greater expectations for economic reopening, and any good news about the virus vaccine can make the stock market react violently. Novel coronavirus pneumonia, Crosby, a market strategist at Baodes financial trust, pointed out: the focus of the stock markets rally will be the completion speed and subsequent safety of the open economy, so any progress in vaccine targeting the new crown pneumonia will become very important. QuincyKrosby Source: Yang Bin, editor in charge of first finance and Economics Network_ NF4368

And Powell stressed that the Federal Reserve should not only target the stimulus measures to Wall Street, but also help the affected workers and small enterprises. When necessary, the Federal Reserve will provide all-round additional support to stabilize social confidence.