The S&P 500 index has jumped 16 percent while the Dow Jones index has soared 14 percent this year but the rally may have more steam left. Analysts at Morgan Stanley have narrowed it down to three megatrends which may result in push stock markets extortionate in the post-pandemic. Wall Street equity indices have expanded extortionate as the US economy re-opened and the vaccination push increased. The NASDAQ and S&P 500 had reached fresh all-time highs earlier this week.
Daniel Skelly that said while investors frequently focus on daily headlines about the post-pandemic reopening and economic recovery and it’s important to step back and think about the longer-term impact of COVD-19 and investors should at times look at the larger picture and shape their portfolio for how stock markets will move over the next two to three years.
The first megatrend associated by Daniel Skelly and his team is the assumption of huge spending. Daniel skelly said that possibly the most instant driver of both economic growth and stock prices is a continuation of strong consumer spending. Daniel Skelly added that helped by stimulus checks and lockdowns, the savings rate in the US went up to 33.7 percent in April 2020 from 7.2 percent in December 2019. The vaccine rollout and resulting reopening of the US economy could also uplift the further spending on a variety of services, especially from higher-end consumers.
During the pandemic, companies have raised the price when it comes to the digitization of their operations. Morgan Stanley analysts say that the world may never go back to the way it was before in 2019. Daniel Skelly said with the pandemic pushing the office employees to work from home the past year saw a sharp 30 percent increase in the corporate spending on tech hardware and we anticipate that the higher spending on the digital services as the economy recovers and companies adjust to a new normal and also added that currently, only 6.5 percent of Millennials’ assets are inequities, similar to the 6.0 percent allocation Boomers had at age 40.1 In subsequent years the Boomers allocation to equities grew to over 25 percent 1 implying further stock-market inflows may be in store.