Equity markets around the globe rose to an all-time high this past week. According to Torsten Slok, an Apollo Global Management Chief Economist, the total stock market cap hit $95 trillion only through past Wednesday. The latest climb was likely triggered by news that BioNTech and Pfizer plan to soon distribute a vaccine found to have a 90-plus percent effective rate in combatting the novel coronavirus.
The rebound has taken about seven months as central banks around the globe eased some measures, and the U.S. government issued fiscal relief to unemployed workers. Stock markets reached their bottom in March when COVID-19 appeared to begin making its global assault. And even though it could take a while before the coronavirus vaccine makes its way around the world, the news is better and sooner than anticipated.
Slok said, “Despite the near-term outlook being negatively impacted by the second wave of the virus, global stock markets are driven higher by vaccine hopes, central bank easing, and prospects of additional global fiscal easing.”
The rebound was led by U.S. equities. The S&P 500 nearly erased its COVID-19 losses in the middle of August. On Monday, the exchange saw another record intraday high of 3,645.99 when the vaccine hopes sparked a huge rally.
Central banks resorted to historically low-interest rates during the onset of the pandemic. The Federal Reserve set a number of programs, and the central bank’s desperate measure of printing money pulled investors from low-yielding bonds towards stocks.
The $2 trillion coronavirus stimulus package passed by U.S. lawmakers in March, along with padded unemployment benefits and other aid, also helped. There’s also talk of a smaller stimulus deal in the making.
Once Pfizer’s news became public, many Wall Street analysts increased their outlook, settling on a more promising recovery for the economy.
Goldman Sachs expects a 20 percent or better gain for the S&P 500 by the end of next year. JPMorgan is also anticipating an approximate 10 percent gain by early 2021.
Many areas of the economy are nowhere near pre-COVID levels. Unemployment claims are still well above pre-coronavirus record levels seen in 1982. A resurgence of COVID-19 cases also points to a bleak winter, and it could be months before the vaccine is distributed to much of the populations. Last Wednesday, daily cases of new coronavirus cases hit 144,000 in the U.S. alone. It marked the highest total for any single day in the U.S. That, along with the average number of cases over the past week, means the U.S. today has 35 percent more cases than it did the past week, signaling that cases will continue to rise.