Dow gains 570 points as Nasdaq starts recovery
U.S. stocks quickly bounced back from a sharp sell-off on Friday, 5th March 2021as bond yields eased. A better than expected jobs report boosted sentiment too.
The Dow Jones Industrial Average climbed 572 points, to 31,496 after losing 150 points in intraday trade.
The S&P 500 ended the wild session 2% higher too at 3,842 after falling 1% earlier in the day. The Nasdaq advanced 1.6% to 12,920 after falling by 2.6% on the day. Quite a turn around.
Bond yields retreat
Bond yields retreated from their session highs. The 10-year Treasury yield eased back to 1.55% after 1.6%.
In part, we have the U.S. job market improvement to thank for these moves. The U.S. reported on Friday, 5th March 2021, that non-farm payrolls gained 379,000 new jobs beating the consensus of 210,000 new jobs.
U.S. stimulus – will a further reported $1.9 trillion of stimulus hinder or help recovery?
The Senate passed a $1.9 trillion coronavirus relief package on Saturday, 6th March 2021 as Democrats rush to complete the deal. This follows a week of market volatility as bond yields continued to climb affecting tech stocks as worries of inflation and interest rates re-surfaced.
Some suggest that too much money sloshing around the financial system may increase inflationary pressure. Investors are concerned interest rates may rise sooner that expected.
Strong recovery?
Recovery should be strong in view of the vaccine rollout and improving economic data but is this latest stimulus really beneficial, or is it just simply adding to the massive debt burden the U.S. has now created? Is it needed?
It is estimated that the U.S. pandemic debt level is around $5.7 trillion to date (including this latest stimulus package).
2020 world debt
Governments around the world added debt in 2020 of $19.5 trillion directly related to the pandemic
UK budget… and now for the debt
Placing the obvious budget headliners of corporation tax and income thresholds aside, the budget didn’t properly address who will be ‘paying’ for the £280 billion spent by the government in its response to the pandemic.
Over £400 billion of new budget debt for the UK
Instead, the £280 billion bill appears to have escalated to over £400 billion in this budget. Who will pay this additional debt burden? The tax payer of course – but it will be a problem for some time to come. It will be a problem for future chancellors to tackle as it will take a generation to settle this now massive UK debt.
Microsoft hack attack
A sophisticated attack on Microsoft’s widely used business email software is reported to have turned in to a global cybersecurity crisis. Victims identified so far include banks and electricity providers among many others.