Traders were feeling optimistic as the calendar rolled over to July. After last week’s poor performance due to rising COVID-19 cases, this week investors continued to focus on the positives. Much of that came from the potential for future stimulus action from the Federal Reserve and other central banks. During the week, the ECB and others announced plans to add to their stimulus packages, giving investors hope that Jerome Powell and the Fed would do the same.
Backing that theory was mixed data. While several points have moved higher in recent weeks as the economy has reopened, many metrics – across inflation, consumer and manufacturing health – remain in contraction phases. Meanwhile, the rising number of COVID-19 cases have the potential to create more lockdowns across the nation. The combo provided enough ammunition to increase expectations that the Fed will react this week. Additional fiscal stimulus measures working their way through Congress also boosted expectations.
Elsewhere, investors seemed pleased with the overall lower protest coverage as well as a general calmness in the geopolitical markets. Several bullish corporate actions and rising M&A activity also helped boost the overall mood on the street.
In the end, stocks rose, finished one of their best quarters in recent memory and started the new month off in splendid fashion.
Be sure to check out our previous Wrap here, when rising COVID-19 cases again hurt the markets.
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