On Tuesday, US stock indexes showed strong growth. The Dow Jones fell slightly to 33,681. The S&P500 index rose to 41,41, while the NASDAQ-100 advanced to 13,983. Two of the three indexes again reached their all-time highs. In general, the stock market continues the upward trend that was observed in the coronavirus crisis last year. Yet, the bubble is getting bigger. The shares of many companies are adding gains not because the companies themselves are growing but because investors need to invest trillions of dollars injected into the economy. Speculators have lost interest in the US debt market as the US Treasury yields are much lower than the inflation indicator. Therefore, the sell-off of US government bonds is in full swing. Although the yield continues to grow, it still remains much lower than the short and long-term inflation. Yesterday's US inflation report delivered a hard blow to the bond market. The consumer price index in March 2021 rose to 2.6% on an annual basis. Many experts believe that inflation is likely to appreciate even more. Naturally, with an inflation rate of 2.6%, investors are unlikely to pay attention to US Treasuries even with a yield of 1.6%. In recent days, the yield of 10-year Treasuries has slightly decreased. Currently, it comes in at 1.632%. There is no doubt that this indicator will continue to climb. Otherwise, investors will flee from the bond market.
On Tuesday, shares of those companies that may suffer from a slowdown in the pace of vaccination incurred hefty losses. The US Food and Drug Administration has recommended stopping the use of the Johnson & Johnson vaccine due to several cases of the rare blood-clotting disorder. Notably, earlier, AstraZeneca faced the same problems. The vaccine has been restricted or banned in many countries around the world. Although the percentage of blood clots after using the Johnson & Johnson vaccine is extremely low in comparison with AstraZeneca, the use of the drug has temporarily stopped. However, it is unlikely to adversely affect the rate of vaccination in the United States. Only 6.8 million people have received doses of the Johnson & Johnson vaccine. The US mainly uses Moderna and Pfizer vaccines.
Tesla shares soared again. Over the past two days, their price rose by $872 despite the fact that there was no groundbreaking news from Elon Musk or from the company. Therefore, such growth can be called speculative. The company's shares are being bought like hotcakes, which absolutely does not correspond to the pace of development of the company.
The S&P500 index is showing stable growth. The S&P 500 stock market index comprises 505 common stocks issued by 500 large-cap companies. For this reason, it accurately reflects the situation in the equity market. Unlike the Dow Jones Industrial Average, it covers not only the largest but also smaller companies. Technically, both linear regression channels signal an upward trend. The Ichimoku Indicator clearly demonstrates an upward trend as well. Currently, there are no signs of the beginning of even a downward correction. Hence, the US stock market is likely to maintain its rally in the long term. The nearest target for the S&P500 index is the level of 4,170.
The material has been provided by InstaForex Company - www.instaforex.com