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Original title: Did the Dow break 30,000 for the first time in the US economic recovery?
2020 is too “fantasy”. Earlier in the year, there were several mergers of US stocks, but at the end of the year, there were several increases in US stocks. Now that the Dow has broken through the 30,000 mark in one fell swoop, the story has once again been updated before the eyes of the world. Vaccines go on all the time and the US elections are finally resolved. Uncertainty is gradually disappearing. The capital market is enjoying early and the hope of recovery of the US economy is gradually increasing. Although the epidemic in the United States is still ongoing, the new economy Stimulus measures are still “hard to give birth”.
30000 points and 62 seconds
Stimulated by numerous good news, US stocks enjoyed a night once again. US equities rose across the board on Tuesday local time, including the Dow closing up 1.54%, closing above 30,000 for the first time, writing history again. At the close of the day, the Dow reported 30,046.24 points, an increase of 1.54%, the Nasdaq was up 1.31% and the S&P 500 Index was up more than 1.6%.
The height of 30,000 points is enough to write a milestone for US equities. It is understood that the Dow Jones Industrial Average was founded in 1896 and is comprised of 30 blue chip stocks in the US stock market and has long been considered a barometer of the US economy. The index broke through the full 20,000 point mark for the first time in January 2017 and on November 16, the Dow just beat 29,964.29 intraday, setting a new high.
US President Trump is very happy to see US stocks rise. Without warning, Trump suddenly “launched” the White House press conference: “I just want to congratulate everyone. The Dow Jones Industrial Average has just hit 30,000 points, which is the highest level in history. it’s just checked, we’ve never exceeded 30,000. Period. This is a sacred number and no one thinks they can meet. “
Trump did not forget to point out: “This is the ninth time that the US stock market has broken the record since early 2020, and it is also the 48th time that the US stock market has broken the record during his tenure. The whole process took only 62 seconds and there was only one theme around it, namely the Dow’s first 30,000 points was an incredible miracle in his tenure. CNBC pointed out that this may be Trump’s shortest speech on the podium. in the White House meeting room.
Trump mentioned many times during the campaign that if Biden was elected, the US stock market and economy would collapse. But as far as the current situation is concerned, this may not be the case: after the media announced Biden’s election, the Dow achieved numerous records. On the 9th of this month, after several American media outlets confirmed that Biden was successfully elected as the next president of the United States, the whole world was relieved and global stock markets saw general increases.
The vaccine rushed to meet the general election
By comparison, the capital market seems to welcome Biden more, and Biden officially overcoming Trump’s barriers to initiate the power transition has become great good news to stimulate the capital market. At 23 local time, Murphy, the director of the US General Services Administration, informed Biden and his team that they were ready to initiate the regime’s transition process and would issue more than $ 7 million to Biden as transition funds.
The next day, the Reuters report mentioned that US Secretary of State Pompeo said the State Department has initiated the transition process and will complete all work in accordance with the law. On the same day, a US government official revealed that the White House had approved the provision of the president’s daily briefing to Democratic presidential candidate Biden. All signs point to the final chapter of the US election, which has been reversed and stalled several times. The uncertainty is eliminated and Biden’s rise to power means that controlling the epidemic and restoring the economy will become the next step for the US government. The main task of the stage.
General election is one aspect, but more importantly, the vaccine. At 23 local time, AstraZeneca said the results of the third phase clinical trial showed that the vaccine developed by the company and the University of Oxford can protect 70.4% of vaccinators. If the dose of the first vaccine is reduced, it can protect up to 90%. Of vaccinators. Previously, the American Pfizer Pharmaceuticals, the German biotech company BioNTech and the American Modena Biotech Company had also announced that the effectiveness of their vaccines reached 95%.
While the “accelerator button” for research and development was pressed, the new corona vaccination was also put on the agenda. On the 20th of this month, Pfizer said it had applied for an emergency use authorization from the US Food and Drug Administration. The Food and Drug Administration plans to hold an Advisory Committee meeting on Vaccines and Related Biological Products on December 10 to discuss the application. The Modenese pharmaceutical company should also submit an application in the coming days.
Additionally, the person in charge of the US federal government’s Vaccine Rapid R&D project said the US plans to start the first batch of COVID-19 vaccination within three weeks. In an interview with CNN, the head of the Slavi project said that the first group of people in the United States is expected to be vaccinated on 11 or 12 December; by May next year, 70% of vaccinations could be achieved in the United States, “thus achieving herd immunity”.
According to Yang Delong, chief economist of the Qianhai Open Source Fund, the US stock market has recently seen a trend of continuous new highs. On the one hand, it is driven by the economic recovery and the successful development of the new corona vaccine. The starting value of the manufacturing PMI in November was 56.7, a new high in six years, while the starting value of the US service sector PMI in November was 57.7, also a five-year high, leading confidence in American investors.
Confidence in US equities and economic reality
The turmoil is about to stabilize, the vaccine is about to arrive and the hearts of investors are restless. It is understood that in the first two trading days of this week, a total of 26 billion shares of US stock exchanges completed trading, which represents a 72% increase over the usual Thanksgiving period. Jerry Braakman, First American Trust’s chief investment officer, said there has been no incident this year that could warn retail investors not to invest so madly, and every moment is an opportunity for bargaining.
To some extent, this reflects investor craziness since March, when US equities began a new bullish cycle with the release of the Federal Reserve. Li Daxiao, chief economist at Yingda Securities, believes the vaccine has just been launched and it may take 1-2 years to complete the mass vaccination, but the economic order and capital market are still expected, especially the market. of capital is relatively sensitive and will reflect the market in advance. The situation, the deterministic recovery after two years was reflected on the capital market earlier than expected.
In other words, what current US stocks actually perceive is just a sign of economic recovery. As for the real recovery of the economy, it could take some time, especially when the US counterattack is severe. According to data from the US Centers for Disease Control and Prevention, since November the number of confirmed cases in a single day in the United States has continued to rise to over 100,000, and a new high of 192,673 cases has been set on 20. In just three weeks since November, the number of new confirmed cases has exceeded 3 million.
What is even more “failed” is that the two parties in the US Congress still have huge differences in the scope and funding of the new round of outbreak relief plans. Over 125 American economists signed an open letter this week urging the US federal government to provide Americans with additional financial assistance through direct stimulus checks and regular payments. “Unless politicians take the necessary actions quickly to respond to the crisis, the economic damage we face could be prolonged, especially for those at the bottom and who have suffered the most.”
The Washington Post said that from the end of this month’s general election until the new congressman officially takes office in January next year, it is difficult for the US Congress to pass major bills during this session of “lame duck”. This means that the new round of financial assistance bills will be difficult to publish until January next year. Fed Chairman Powell has repeatedly stressed that if the government does not have a new round of economic relief measures, it will become more difficult to compensate for the economic damage caused by the epidemic, and the prospects for US economic recovery will also face greater uncertainty.
According to Li Daxiao’s analysis, the US economy is an important weather vane for the global market and the US economy can be roughly divided into two segments. One is the hurrying phase before the vaccine is launched. This phase of the economy is undoubtedly stagnant. However, when the dust settled in the recent general election, vaccine research and development was declared successful, propelling the US economy into a new phase of recovery. Overall, the US economy is expected to continue to grow negatively this year, but next year there may be considerable positive year-over-year growth and pro-cyclical companies may be repaired to some degree.
Beijing Commercial Daily reporter Yang Yuehan
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