Stocks in the United States reach unprecedented heights, setting new record highs.
New York, December 28, 2020 - The U.S. stock markets reached new all-time highs on Monday, with the Dow Jones Industrial Average closing at an unprecedented 30,522 points. This significant milestone was driven by a combination of factors that boosted investor confidence and fuelled buying in equities.
The relief over the end of the U.S. corona aid package deadlock and positive news from Europe continued to boost U.S. stocks. The prospect of the roughly 900 billion U.S. dollars from the government's stimulus program was the main driver of the stock market. The stimulus provided direct payments to individuals, extended unemployment benefits, and aid to businesses, which boosted consumer confidence and liquidity in the markets.
In addition to the stimulus, there was a reduction in global trade tensions, particularly easing tariff worries between the U.S. and China. Lower tariff concerns typically reduce uncertainty for multinational companies and improve global trade prospects, which supports higher stock valuations.
Many companies reported earnings that beat expectations entering the end of 2020, which reinforced investor confidence in the economic recovery and corporate profitability moving forward. Equity markets were also propelled by momentum investing factors, which continued their strong year-to-date performance.
Positive developments in global trade, including progress in trade agreements and reduced geopolitical risks, improved the outlook for international commerce. This global backdrop further supported U.S. markets, which are highly sensitive to trade dynamics.
The Brexit trade pact and the start of vaccinations in the EU further pleased U.S. investors concerned about global trade. The S&P 500 closed around 3,735 points, up 0.87 percent, while the Nasdaq closed around 12,905 points, up 0.81 percent, also reaching new record highs.
In the evening, one euro was worth 1.2211 U.S. dollars (+0.2 percent), and one dollar was worth 0.8189 euros. The European common currency strengthened slightly in the evening, given the expected money flood. An ounce of gold was equivalent to 49.29 euros per gram, and the gold price fell significantly, with 1,872 U.S. dollars paid for an ounce of gold in the evening.
The record-high U.S. stock markets on December 28, 2020, were a testament to the resilience of the economy amid the COVID-19 pandemic and the positive impact of fiscal stimulus, easing of trade tensions, strong corporate earnings, and positive global trade developments.
[^1^] While the specific day is not detailed in the data, the general factors prevailing in late 2020 included easing tariff concerns and strong earnings reports fueling gains in the S&P 500, as seen in performance trends from the period.
(Photo credit: dts Nachrichtenagentur)
- The reduction in global trade tensions, particularly the easing of tariff worries between the U.S. and China, provided relief for multinational companies and improved global trade prospects, contributing to the rise in stock valuations, as seen with the S&P 500 reaching record highs.
- In addition to the stimulus provided by the government, strong corporate earnings reporting and positive global trade developments contributed to the strengthening of investor confidence in the economy, resulting in increased activity in other finance areas, such as the S&P 500 and the Nasdaq.
