Tue. May 28th, 2024
Weakening Inflation Rates are helping the US Stock Markets End Sessions in GreensWeakening Inflation Rates are helping the US Stock Markets End Sessions in Greens

Since the start of the ongoing year, the US Stock market had been facing a huge downtrend. The year started with a global economic downfall as the rising inflation rates rained down every part of the world.

However, it was the US economy that was the center of attention. This is because the US economy has the potential of making and breaking the economies of countries that are connected with the dollar.

As the dollar is the largest global reserve currency, therefore, it holds the highest significance in the entire world, thus, the global economy.

Downfall of US Stock Markets

According to many analysts, the year 2020 proved to be the worst year for the global stock markets. This was the time when almost every sector in the world suffered major losses.

Only a handful of sectors were able to benefit due to the pandemic. In the year 2021, the global stock markets started to recover as the pandemic lockdowns and curfews were finally getting lifted.

However, the economists and market analysts had predicted that the catastrophe caused by the pandemic would have a huge impact on the global economy.

Although its impact on the economy was not felt entirely in 2020 and 2021 but the year 2022 was the one when things got out of hands.

Unfortunately for the US markets, the situation was the worst as it has the highest number of companies from all over the world listed onto its indexes.

The economic pressure kept on building on the stock markets right from the start of 2022. The inflation rates kept on rising and to fight it off, the US Feds had to hike the interest rates.

This caused the stock markets to face a major negative impact as the investors were not left with much to invest. They were hesitant to invest in stocks as they feared for an all-out recession.

Every stock market started facing the impact of the rate hikes and the change in behavior of the investors due to the hikes.

The US Stock Markets are Recovering

The Feds announced that the rate hikes would help control the inflation rates. Therefore, the Feds started increasing the interest rates from June 2022.

Surprisingly, the interest rate hikes started to prove highly effective against the inflation rates. The data coming in from the CPI, PPI, and the NFP has been highly promising, and has kept getting better since June.

With the inflation rates going down, the confidence of the investors has been rejuvenated and they have started investing in stocks.

This is the reason why the stock markets have started performing better in the recent weeks. Even the running month has proven to be positive for the US stock markets.

US Stock Market Performance

Just to have a look at the US Stock market data, the latest trading session for the NASDAQ Composite has brought in 0.01% gains.

The S&P 500 and the Dow Jones Industrial Average indexes have recorded 0.48% and 0.59% gains respectively.

The NASDAQ, the S&P 500, and the Dow Jones indexes have surged to 11,146.06, 3,965.34, and 33,745.69 points respectively.

Even the entire month of November has recorded an upward movement for all three indexes.

With time, as the inflation rates and other economic data continues to grow more promising, the Feds would lower the interest rates as well.

This would mean that the investors will be saving money from both sides, allow them to invest more into stocks.

The Top Choices for Investments

It is surprising to see that in the recent trading sessions, it is not the usual tech giants from the tech segment who are the highest gainers.

Instead, it is companies with lower valuations who are among the top gainers. Even the online brokers are recommended to trade with these stocks that include Palo Alto Networks, Meituan, MercadoLibre, and Keysight.

The share prices for these companies have surged by 6.97%, 4.84%, 3.77%, and 3.54% in the latest trading sessions.