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Stock market goes up; what exactly is the reason behind the rally?

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Stock Market Goes Up. What is the real reason?

The bulls started parading on the Dow since Monday, and the speculations about what caused the rally are heating up. There are many possible reasons; news about the President’s recoveryhopes on the new stimulus package, or it could even be due to fewer worries about a contested election. 

The Dow Jones Industrial Average advanced 465.83 points, or 1.7%, to 28,148.64 on Monday, while the S&P 500 rose 1.7% to 3408.60, and the Nasdaq Composite advanced 2.3% to 11332.49. It continued to rally on the following trading day, with the Dow Jones Industrial Average rising to more than 125 points before cutting gains. 

A positive outlook for the economy

While the recent headlines stating the reasons mentioned above coincided with the market rally, there are other possible drivers. There is a potential reassessment of Friday’s job report, with positive-looking data. The services index climbs to 57.8% in September from 56.9%, a level that indicates continued growth.

“The good numbers just keep coming,” as stated by Joel Naroff, president and chief economist at Naroff Economics.

“Today, the Institute for Supply Management reported that activity in the service and construction portions of the economy continued to improve in September.“

Employment, according to the surveys, also grew for the first time since the pandemic began. The employment gauge climbed to 51.8% from 47.9%, suggesting companies are hiring more workers, not downsizing. 

Deploying tranches now is further justified.

From another perspective, investors may have been taking positions now as strategists from JPMorgan Chase & Co. have speculated that a stock market shift might happen if Presidential candidate Biden takes the victory. Mislav Matejka, who leads the strategists from JPMorgan, noted on Monday:

“A potential Biden victory should not be seen as a negative for markets, and could lead to internal rotation.”

These statements from the financial service institution came while Biden currently holds a comfortable lead in national polls over President Donald Trump a month before Election Day. 

Instinet’s Frank Cappelleri observes that the S&P 500’s biggest one-day gain in nearly a month helped the benchmark breach the 3400 walls for the first time since mid-September, which also takes it above the 50-day moving average. “This was more than enough to void the SPX’s bearish pattern finally,” he writes. The final push also triggered the smaller of the two bullish formations we’ve been watching. The upside target is 3,570.” 

Jinel Franco is a Multi-Media Artist and a Content Marketing Strategist. For the past 3 years, she has helped several companies and individuals bring out the best of their brand with quality content and media.

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