“US stocks started the week on a positive note between FDA approval for Pfizer vaccine and BioNTech, Comirnaty. That’s what the headlines say, but there’s more to justification for yesterday’s rally. Friday, Dallas Federal Reserve (Fed) chairman Robert Kaplan said the rise in Covid cases and the resulting economic tensions lead him to adjust his view on the idea of eliminating the Fed stimulus. Now he thinks that it may not be the right time. And that’s exactly what the market was hoping to hear from a member who, until now, was arguing that an early taper, “comments Ipek Ozkardeskaya, senior analyst at Swissquote.
Kaplan’s dovish comments, combined with weak July PMI data, boosted the Fed’s doves just days away from Jerome Powell’s Jackson Hole speech, setting new records on US indices, according to the expert.
“I personally believe that the positive mood of the US stock market is destined to remain ahead of the Jackson Hole meeting, as Fed Chairman Jerome Powell could only soften the hawkish tone of last week’s FOMC minutes – says Ipek Ozkardeskaya. Covid cases on the rise and weak data can only keep the Fed alert and reluctant to act prematurely. And that’s all the market wants to hear at the moment. “