- The Nasdaq Composite was up 11.69% in the past 20 days, recovering to an all-time high.
- In the short term, the US stock market faces numerous threats, including soaring COVID-19 cases in the winter season.
- Big Tech’s strong performance, a possible post-election stimulus, and vaccine breakthroughs could fuel stocks in November.
The Nasdaq Composite faces multiple threats in the fourth quarter that could potentially affect its strong technical momentum. Above all, numerous important catalysts could increase their dynamics after the presidential election.
The three determining factors for a prolonged rally on the Nasdaq are the big tech resurgence, post-election incentive and vaccine breakthroughs.
Since September 23, the index has risen 11.69%, nearing its all-time high on September 2.
Dr. Fauci’s COVID-19 warnings and dismal earnings are Nasdaq risks
Since September, Dr. Anthony Fauci raised concerns about the worrying trend of COVID-19 in the United States.
Fauci pointed out the high baseline virus cases in the US and the infection rate in relation to the numbers.
Fauci started on the way to December Sound the alarm as COVID-19 cases grow.
Speaking to CNBC, Fauci bluntly stated that the US was “in a bad place” as colder weather approaches.
Dr. Fauci stated:
We’re in a bad place now. We have to change that … We have to convince Americans that public health action does not mean closing the country. It’s actually a way of keeping the country open.
As the number of virus cases increases, the likelihood of additional restrictions that can affect overall business productivity increases.
Hence, the prospect of a worsening pandemic in the coming months could hurt the momentum of the Nasdaq Composite.
The US also reported its first confirmed COVID-19 reinfection Scientists were concerned about the upcoming winter season.
On the dire prospect of the pandemic, other major stock indices, particularly in Europe, fell due to weak earnings.
However, there is hope that the strength of big tech, the possibility of vaccines, and a new stimulus package could offset gloomy market sentiment.
Catalyst # 1: Big Tech Performance
From April through September, Big Tech fueled the Nasdaq Composite’s record rally.
According to Holger Zschaepitz, a market analyst with Welt, Apple, Amazon and technology stocks, the Nasdaq recently outperformed. He said::
“Nasdaq has its best day since April in the form of a crack-up boom ahead of Q3 2020 earnings season, the announcement of the Apple iPhone, Amazon Prime Days and a general appreciation of tech stocks due to ever lower interest rates.”
For tech-heavy indices like the Nasdaq and the S&P 500, the big tech resurgence remains a major catalyst.
Catalyst # 2: Post-election stimulus could lift the Nasdaq
On October 7, US President Donald Trump became Rejected the $ 2.4 trillion stimulus proposal from the Democrats.
President Trump specified These economic talks would only be continued after the election and the newly proposed economic stimulus program would be criticized.
But shortly thereafter, President Trump tweeted that the House and Senate should approve further incentives “immediately”. He said::
“The House and Senate should IMMEDIATELY approve $ 25 billion in support of flight accounting and $ 135 billion in the small business paycheck protection program. Both are paid in full with unused funds from the Cares Act. Got this money. I will sign now! “
The point in time when President Trump is so quick to call for additional incentives after the stimulus proposal has been rejected makes a business cycle deal more likely after the election.
Strategists believe a stimulus package won’t come before the November 3rd presidential election. Check out the video below:
Catalyst # 3: Vaccine Breakthroughs
Goldman Sachs strategists will be there by the end of the year Not to discard the prospect of vaccine breakthroughs promoting high-risk assets.
A team of strategists led by Zach Pandl, Co-Head of Global FX, Rate and EM Strategy at Goldman Sachs, wrote:
“However, the wide latitude in recent polls reduces the risk of a delayed election result and the prospect of near-term vaccine breakthroughs could represent a setback for risky assets.”
The concurrence of the rebound in tech stocks and favorable macro factors could further fuel the trend in US stocks in November.