There has been a popular – quite optimistic, too – opinion circulating around, according to which the year of 2021 will bring a soaring stock market. It is believed that combined, COVID-19 vaccines and the economic stimulus package, will fuel stocks to reach a much higher point by June of next year and the economy will move into overdrive mode.
What exactly needs to happen for these speculations to come into existence? Two reasons.
- By the beginning of 2021, we will have approved COVID-19 vaccines. Surely, they won’t be perfect, but they’ll be just good enough to protect the most vulnerable. This will lift the existing restrictions and allow most people to get back to work. Subsequently, the economy can begin to repair.
- By next June, it is expected that the massive stimulus provided by the Federal Reserve will have come in full force. Inherently, the major indices will rise: S&P 500 SPX is expected to gain +0.64%, Nasdaq Composite COMP, +0.52% and the Dow Jones Industrial Average DJIA will climb +1.39%.
Do you find it hard to believe? We don’t blame you. There are no guarantees that these events will unfold the exact way we said they would. Regardless of how much of it is going to come true, you always have to be prepared for the unexpected. Always have a plan B, so you can act immediately in the event of big market changes.
The Biggest Players
The race for a working vaccine has seen its ups and downs. As of today, there isn’t a single universal vaccine that has undergone sufficient trials and studies, and is ready for mass production. Many big pharmaceutical companies have jumped in on the opportunity to deliver a working solution during the pandemic. However, with a number of clinical studies to choose from, none of the available vaccines provide a 100% positive result.
According to The New York Times, “Regulators in each country review the trial results and decide whether to approve the vaccine or not. During a pandemic, a vaccine may receive emergency use authorization before getting formal approval.”
The biggest companies in this vaccine race include Moderna (MRNA +0.21%), (Pfizer PFE +1.69%) and BioNTech (BNTX -0.12%) and AstraZeneca (AZN -0.02%).
“If you have a vaccine that provides a 60% reduction in symptoms, I think that will lead to significantly less disease burden, less hospitalizations and less death,” said Michael Yee, biotech analyst at Jefferies. “The early data are very promising.”
What do you think? Will we see the light at the end of the tunnel in 2021 or is the global economic recession inevitable?