US President Biden has said that 90% of the US should be vaccinated by April 19. This fast rollout of the vaccine in the US is a strong tailwind for the US. On top of this President Biden has plans for a $3 trillion stimulus package which should further underpin stocks.
The S&P500 is entering into a strong time of year where it tends to see seasonal gains. Over the last 25 years the S&P500 has risen 19 times between April 01 and May 01. The average return over the last 25 years has been +2.41%. The maximum profit was +14.58% in 2020. There have been 6 losses in the last 15 years. The largest drop was in 2002 with a -5.24% fall.
This seasonal period is one of the strongest patterns for the S&P500 and is only to be surpassed by the November to December period over the last 25 years.
Trade risks
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There is a growing risk that investors consider equity markets overbought and that could see a correction. It is hard to know when that correction will come, but investors need to be aware of the potential risk.
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There is also a risk that another break out of COVID-19 could slow down the US recovery.
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Finally, any new strong COVID-19 variant could invalidate this outlook and cause S&P500 selling.
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If the US stimulus bills find roadblocks then that could invalidate this positive outlook for US stocks.
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Also, be aware that market conditions are not ‘normal’ due to COVID-19 fallout.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
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