Stock markets reward investors who overcome the wall of worry. On Monday, the Nasdaq (QQQ) added back 1.58% in gains. Nvidia (NVDA), Alphabet (GOOG), and Meta Platforms (META) led the rebound.
Traders are placing their bets ahead of the quarterly earnings season for the technology sector.
The fall in U.S. Treasury bond yields also helped. Markets are pricing in the Fed’s 25 basis points cut in September.
On Sunday, President Biden announced that he would not run for re-election. Markets are pricing in an increasing likelihood of a Trump second term. Investors view this outcome as a bullish development for stocks. In a favorable business environment, most firms will thrive, especially those in the growth sector.
Chinese tech stocks bounced back in response, although this is irrational. Both the Republicans and Democrats would continue punitive trade barriers to limit China’s global growth.
Economic News
Watch for the Gross Domestic Product report for the second report this Thursday. It should show strong economic activity. That data would complement the recent job and inflation report. In June, jobs increased while inflation fell by 0.1%. Markets believe that the broader economy is healthy. They spread their investments beyond the S&P 500 (SPY) by adding holdings to the Russell 2000 (IWM).
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