Investors are gaining confidence in the American economy as indicated by the S&P 500 which surged back above $3800 in today’s trading, reaching highs of $3840. The reasons behind this boost spans across a strong earning season across board, upbeat vaccine and stimulus news.
The earning season has been a particularly strong one, with about 84% of S&P 500 components performing above the consensus, far better than the 64% average beat rate since 1994. Analysts now see aggregate fourth-quarter S&P 500 earnings falling just 1.2% YoY, significantly above expectations that earnings would have fallen 10.3% YoY at the start of January.
The Biden administration sat with the senate yesterday and had a progressive conversation about the stimulus package. Although the value proposed is about $618 billion, a far cry from the $1.9 trillion package that Biden is asking congress to pass, the Senate will soon be voting to begin the budget reconciliation process which will be used to pass the next round of fiscal stimulus.
The Russian Sputnik V Covid-19 vaccine was reported to be 91.6% effective in a Phase 3 trial and caused no serious adverse effects, according to a peer-reviewed paper published in the Lancet. The vaccine is likely to get regulatory approval from the EU and this will help the zone speed up its lagging vaccination efforts. EU member state Hungary has already approved and begun distribution of the Sputnik vaccine.
According to an Oxford Academics pre-print paper, the Oxford University/AstraZeneca vaccine showed efficacy of 76% after a single dose from day 22 to 90 following vaccination. The paper suggests that the vaccine is likely to cause a 67% reduction in positive test results amongst the persons vaccinated, yielding a significant effect in the reduction of transmission of the virus.
Victor Nnadi is an Independent Economics Researcher and a Securities Trader.
