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Major Stock Indexes Start the Month on Record Highs

At the beginning of the month and also of the week, major stock indexes are showing strong urge to rise further. Led by the Dow Jones Industrial Average (INDEXDJX: .DJI) that gained 215.61 points, or 0.8%, to close at 28,645.66 on Tuesday. The S&P 500 (INDEXSP: .INX) climbed 0.8% to hit 3,526.65, whereas the Nasdaq Composite (INDEXNASDAQ: .IXIC) added 1.4% to trade at 11,939.67. Notably, both the S&P 500 and Nasdaq hit all-time highs during the day. This comes as their components surged, with investors rejuvenated on possible better quarterly profits.

One of the biggest gainers of the week might be Zoom Video Communications Inc (NASDAQ: ZM) that added over 40% on Tuesday after the company reported better than predicted Q2 results.

Mark Hackett, Nationwide’s chief of investment research, said in a note on Monday:

“While growth and momentum names continue to be the primary driver of returns, value and cyclicals have begun to participate”.

Most investors are comfortable putting their money in the perceived risky stock market to cash in much profit. Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management, stated:

“That’s just the playbook investors are reading right now. They’re playing the momentum game, but at some point, I think that shifts. As the economic recovery continues, I think you will see a broadening of the stocks participating in this rally.”

As the economy generally recovers from the coronavirus crisis, the rate of job creation will be a huge factor in the net stock rally.

Kristina Hooper, Invesco’s chief global market strategist, said in a note:

“Normally, a good jobs report would spark concern that the Fed might tighten in order to proactively combat inflation and economic overheating. That concern has gone by the wayside, at least for now, with the Fed’s new policy”.

With the U.S. still facing a significant large portion of the population with unemployment, how the Fed plays out in the coming quarters will largely determine the next course of the stock market. Hooper also noticed:

“With regard to US jobs, it’s important to keep in mind that the Fed’s new inflation target policy may impact how the market receives this news”.

The rise on the leading stock indexes may be bolstered by leading tech companies including Apple Inc (NASDAQ: AAPL), Walmart Inc (NYSE: WMT), and even Microsoft Corporation (NASDAQ: MSFT) whose businesses have not been largely affected by the coronavirus crisis.

Major Stock Indexes Start the Month on Record Highs

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