US Markets

"Great Reopening" Gets 2 Big Boosts: Fed & Abbott

Market indexes finished mostly higher again today, with only the Nasdaq dipping into the red late in regular trading. The S&P 500 set yet another all-time closing high on its 6th-straight day in the green, with the Dow inching ever-closer to its 2020 breakeven point. Best of all, we’re not seeing these gains come only from a handful of popular stocks blasting further out into the stratosphere — Financials and Real Estate stocks were among Thursday’s strongest performers.

The reason for this good news comes from two specific areas, both of which hit the news cycle ahead of today’s open but which got sweeter the more investors chewed on them. The first was widely expected: a policy shift coming from the Fed at the Economic Policy Symposium at Jackson Hole, delivered by Fed Chair Jay Powell, whereby inflation concerns were now to give way to maximize full employment. According to the Fed, a strong labor market is now Job 1 — which is understandable, especially considering his speech came less than an hour after another 1+ million new American workers were reported to have filed for unemployment in the last week.

Previously, the Fed had been looking for a 2% inflation target which became hard to come by. When the pandemic hit — actually, even before the pandemic fallout — the Fed made the bold decision to slash interest rates and backstop the economy before the coming shutdown could seize the works, such as what happened at the start of the mortgage-backed financial crisis in 2008.

Now that these measures have not led to anything resembling inflation in the economy, the Fed is giving it the gas in hopes spending — both from individuals and business investment, including and especially employee payroll builds — finally provides the remedy the economy needs.

The other side of the economic struggles has to do with curbing the spread of Covid-19, so that the “Great Reopening” can enjoy some sustainability and not have to lurch forward in fits and starts. Enter Abbott Labs ABT, which has received emergency approval from the FDA for its portable antigen rapid Covid test that requires no additional equipment and only costs $5.

Results of the test would be available in minutes and does not need laboratory assistance. This means that schools, plane flights, indoor restaurants, movie theaters and any number of other public congregations might be rendered safe, or at least much safer, that our current environment.

The U.S. government is prepared to spend $750 million on the test, and Abbott has said it plans to produce 50 million tests per month starting in October. This potential game-changer may still need to answer questions regarding test accuracy, but assuming that’s not a big issue, this test has “game-changer” written all over it.

Thus, perhaps we have some light at the end of this tunnel, after all. And this would make this summer’s run-up in market index values — bubblicious though they may still prove to be — far more justified than previously known.

Questions or comments about this article and/or its author? Click here>>

 

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


Click to get this free report

Abbott Laboratories (ABT): Free Stock Analysis Report

SPDR SP 500 ETF (SPY): ETF Research Reports

Invesco QQQ (QQQ): ETF Research Reports

SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Markets Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More