“These are impressive numbers that took people by surprise,” said Todd Lowenstein, capital strategy executive for The Private Bank at Union Bank.
Stocks are on track to close a shortened trading week with solid gains. The US market is closed on Friday in celebration of the Independence Day holiday.
The Dow is up over 3% this week, while the S&P 500 and Nasdaq have gained over 4% each.
Nasdaq is now up nearly 15% this year. However, the S&P 500 and Dow are still in the red for 2020, at 3% and 9% respectively.
Lowenstein said the key to further increasing the market will be whether the economy continues to gain momentum or not.
Some experts are concerned that the “high sugar level” of stimulus controls could fade and consumers may start spending less. New outbreaks of Covid-19 cases in Florida, Texas, Arizona, and other states also have the potential to derail the rebound on Main Street and Wall Street.
“The reopening process should drive further job creation, but if restart efforts stall in a second wave, gains in leisure and hospitality and other consumer sectors could easily fade,” Lowenstein said.
And the broader market enjoyed solid gains on Thursday, with the top eleven sectors of the economy on the rise following the job news.
But the latest market strength is unlikely to change the Federal Reserve’s current stance on the economy.
The Fed has cut rates to zero and launched trillions of dollars in stimulus efforts to help support the economy and the market. It seems to be working,
“This rebound is understandable considering what the Fed has done. It is the main driver of all market action,” said Patrick Leary, chief market strategist and senior operator at Incapital.
Still, others are expressing more caution. Although economic data is improving, the huge rebound in the market since the March lows may make it difficult for stocks to continue to rise.
“The easy money from the recovery has already been made. We will improve more but it will not be at the same rate,” said Troy Gayeski, co-chief investment officer at SkyBridge. “It could become more irregular, more volatile, and much more choppy.”
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