- NYSE: RKT is set to bounce after hitting critical support.
- Rising coronavirus cases could push the Federal Reserve to lower long-term rates.
- Fiscal stimulus could also encourage taking loans.
Rockets that go to outer space launch from the ground – will that be the case for Rocket Companies Inc? The Detroit-headquartered firm may be ready for lift-off.
NYSE: RKT shares have closed at $20.01 on Wednesday, some 2.68% lower and at the trough recorded in late September. After hitting a bottom in October, Thursday's pre-market trading is pointing to a bounce of over 2%.
The Detroit-based financial firm has reasons to rise.
RKT Stock Forecast
Coronavirus cases are rising in Rocket's home state of Michigan and in its cold neighbors such as Wisconsin and Illinois. The lending company operates across America and hospitalizations are rising in the south and also in the greater New York area.
Why is COVID-19 a positive factor for NYSE: Rocket? An increase in infections could dampen economic forecasts and push the Federal Reserve to provide additional monetary stimulus. As the Fed is unenthusiastic about setting negative rates, it could increase its bond-buying operation and lower long-term borrowing costs, such as mortgages.
While lower rates could narrow Rocket's margins, which could be compensated by a higher volume of activity coming from people taking advantage of falling borrowing costs.
Moreover, Democrats and Republicans in Washington could finally sign off on a new fiscal relief package. The increase in infections could push the parties toward a deal even in the "lame-duck" session – between the elections and the inauguration of a new president and Congress.
In turn, a boost from the federal government could also encourage individuals and companies to lend money for recovery and expansion. That applies to all states, regardless of their caseload or political leanings, benefiting Rocket Companies Inc's business.
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